Correlation Between Telenor ASA and MTN Group
Can any of the company-specific risk be diversified away by investing in both Telenor ASA 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 Telenor ASA and MTN Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telenor ASA and MTN Group Ltd, you can compare the effects of market volatilities on Telenor ASA 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 Telenor ASA with a short position of MTN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telenor ASA and MTN Group.
Diversification Opportunities for Telenor ASA and MTN Group
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Telenor and MTN is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA and MTN Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN Group and Telenor ASA 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 Telenor ASA 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 Telenor ASA i.e., Telenor ASA and MTN Group go up and down completely randomly.
Pair Corralation between Telenor ASA and MTN Group
Assuming the 90 days horizon Telenor ASA is expected to generate 1.14 times more return on investment than MTN Group. However, Telenor ASA is 1.14 times more volatile than MTN Group Ltd. It trades about 0.03 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 1,045 in Telenor ASA on August 28, 2024 and sell it today you would earn a total of 121.00 from holding Telenor ASA or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 60.17% |
| Values | Daily Returns |
Telenor ASA vs. MTN Group Ltd
Performance |
| Timeline |
| Telenor ASA |
| MTN Group |
Telenor ASA and MTN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telenor ASA and MTN Group
The main advantage of trading using opposite Telenor ASA and MTN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telenor ASA 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.| Telenor ASA vs. Orange SA ADR | Telenor ASA vs. ATT Inc | Telenor ASA vs. Verizon Communications | Telenor ASA vs. MTN Group Ltd |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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