Correlation Between SoftBank Corp and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both SoftBank Corp and Airtel Africa 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 SoftBank Corp and Airtel Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Corp and Airtel Africa Plc, you can compare the effects of market volatilities on SoftBank Corp and Airtel Africa 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 SoftBank Corp with a short position of Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Corp and Airtel Africa.
Diversification Opportunities for SoftBank Corp and Airtel Africa
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SoftBank and Airtel is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Corp and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc and SoftBank Corp 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 SoftBank Corp are associated (or correlated) with Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of SoftBank Corp i.e., SoftBank Corp and Airtel Africa go up and down completely randomly.
Pair Corralation between SoftBank Corp and Airtel Africa
Assuming the 90 days horizon SoftBank Corp is expected to generate 0.48 times more return on investment than Airtel Africa. However, SoftBank Corp is 2.08 times less risky than Airtel Africa. It trades about 0.04 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about -0.19 per unit of risk. If you would invest 1,243 in SoftBank Corp on August 31, 2024 and sell it today you would earn a total of 12.00 from holding SoftBank Corp or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SoftBank Corp vs. Airtel Africa Plc
Performance |
| Timeline |
| SoftBank Corp |
| Airtel Africa Plc |
SoftBank Corp and Airtel Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Corp and Airtel Africa
The main advantage of trading using opposite SoftBank Corp and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Corp position performs unexpectedly, Airtel Africa 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 Airtel Africa will offset losses from the drop in Airtel Africa's long position.| SoftBank Corp vs. Verizon Communications | SoftBank Corp vs. ATT Inc | SoftBank Corp vs. Comcast Corp | SoftBank Corp vs. KDDI Corp |
| Airtel Africa vs. Verizon Communications | Airtel Africa vs. ATT Inc | Airtel Africa vs. Comcast Corp | Airtel Africa vs. KDDI Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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