Correlation Between Nippon Telegraph and MTN Group
Can any of the company-specific risk be diversified away by investing in both Nippon Telegraph and MTN Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nippon Telegraph and MTN Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Telegraph Telephone and MTN Group Ltd, you can compare the effects of market volatilities on Nippon Telegraph and MTN Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nippon Telegraph with a short position of MTN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Telegraph and MTN Group.
Diversification Opportunities for Nippon Telegraph and MTN Group
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nippon and MTN is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Telegraph Telephone and MTN Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN Group and Nippon Telegraph is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nippon Telegraph Telephone are associated (or correlated) with MTN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN Group has no effect on the direction of Nippon Telegraph i.e., Nippon Telegraph and MTN Group go up and down completely randomly.
Pair Corralation between Nippon Telegraph and MTN Group
Assuming the 90 days horizon Nippon Telegraph Telephone is expected to generate 1.45 times more return on investment than MTN Group. However, Nippon Telegraph is 1.45 times more volatile than MTN Group Ltd. It trades about 0.01 of its potential returns per unit of risk. MTN Group Ltd is currently generating about -0.04 per unit of risk. If you would invest 113.00 in Nippon Telegraph Telephone on August 28, 2024 and sell it today you would lose (12.00) from holding Nippon Telegraph Telephone or give up 10.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.74% |
| Values | Daily Returns |
Nippon Telegraph Telephone vs. MTN Group Ltd
Performance |
| Timeline |
| Nippon Telegraph Tel |
| MTN Group |
Nippon Telegraph and MTN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Telegraph and MTN Group
The main advantage of trading using opposite Nippon Telegraph and MTN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Telegraph position performs unexpectedly, MTN Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MTN Group will offset losses from the drop in MTN Group's long position.| Nippon Telegraph vs. Vodafone Group PLC | Nippon Telegraph vs. KDDI Corp | Nippon Telegraph vs. Amrica Mvil, SAB | Nippon Telegraph vs. ATT Inc |
| MTN Group vs. Vodafone Group PLC | MTN Group vs. KDDI Corp | MTN Group vs. Amrica Mvil, SAB | MTN Group vs. ATT Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.
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