Correlation Between ATT and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both ATT and Telenor ASA 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 ATT and Telenor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Telenor ASA, you can compare the effects of market volatilities on ATT and Telenor ASA 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 ATT with a short position of Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Telenor ASA.
Diversification Opportunities for ATT and Telenor ASA
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ATT and Telenor is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Telenor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA and ATT 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 ATT Inc are associated (or correlated) with Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA has no effect on the direction of ATT i.e., ATT and Telenor ASA go up and down completely randomly.
Pair Corralation between ATT and Telenor ASA
Given the investment horizon of 90 days ATT is expected to generate 5.05 times less return on investment than Telenor ASA. But when comparing it to its historical volatility, ATT Inc is 3.71 times less risky than Telenor ASA. It trades about 0.02 of its potential returns per unit of risk. Telenor ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,020 in Telenor ASA on August 27, 2024 and sell it today you would earn a total of 146.00 from holding Telenor ASA or generate 14.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 69.23% |
| Values | Daily Returns |
ATT Inc vs. Telenor ASA
Performance |
| Timeline |
| ATT Inc |
| Telenor ASA |
ATT and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Telenor ASA
The main advantage of trading using opposite ATT and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Telenor ASA 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.The idea behind ATT Inc and Telenor ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Telenor ASA vs. Vodafone Group PLC | Telenor ASA vs. KDDI Corp | Telenor ASA vs. Amrica Mvil, SAB | Telenor ASA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |