Correlation Between SwissCom and Magyar Telekom
Can any of the company-specific risk be diversified away by investing in both SwissCom and Magyar Telekom 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 SwissCom and Magyar Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SwissCom AG and Magyar Telekom Plc, you can compare the effects of market volatilities on SwissCom and Magyar Telekom 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 SwissCom with a short position of Magyar Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of SwissCom and Magyar Telekom.
Diversification Opportunities for SwissCom and Magyar Telekom
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SwissCom and Magyar is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding SwissCom AG and Magyar Telekom Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Telekom Plc and SwissCom 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 SwissCom AG are associated (or correlated) with Magyar Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Telekom Plc has no effect on the direction of SwissCom i.e., SwissCom and Magyar Telekom go up and down completely randomly.
Pair Corralation between SwissCom and Magyar Telekom
Assuming the 90 days horizon SwissCom is expected to generate 10.14 times less return on investment than Magyar Telekom. But when comparing it to its historical volatility, SwissCom AG is 2.5 times less risky than Magyar Telekom. It trades about 0.03 of its potential returns per unit of risk. Magyar Telekom Plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 371.00 in Magyar Telekom Plc on August 25, 2024 and sell it today you would earn a total of 1,144 from holding Magyar Telekom Plc or generate 308.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
SwissCom AG vs. Magyar Telekom Plc
Performance |
| Timeline |
| SwissCom AG |
| Magyar Telekom Plc |
SwissCom and Magyar Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SwissCom and Magyar Telekom
The main advantage of trading using opposite SwissCom and Magyar Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SwissCom position performs unexpectedly, Magyar Telekom 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 Magyar Telekom will offset losses from the drop in Magyar Telekom's long position.| SwissCom vs. HUMANA INC | SwissCom vs. SCOR PK | SwissCom vs. Aquagold International | SwissCom vs. Barloworld Ltd ADR |
| Magyar Telekom vs. HUMANA INC | Magyar Telekom vs. SCOR PK | Magyar Telekom vs. Aquagold International | Magyar Telekom vs. Barloworld Ltd ADR |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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