Correlation Between Telenor ASA and Vodacom Group
Can any of the company-specific risk be diversified away by investing in both Telenor ASA and Vodacom 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 Vodacom 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 Vodacom Group Ltd, you can compare the effects of market volatilities on Telenor ASA and Vodacom 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 Vodacom Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telenor ASA and Vodacom Group.
Diversification Opportunities for Telenor ASA and Vodacom Group
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telenor and Vodacom is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA and Vodacom Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodacom 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 Vodacom Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodacom Group has no effect on the direction of Telenor ASA i.e., Telenor ASA and Vodacom Group go up and down completely randomly.
Pair Corralation between Telenor ASA and Vodacom Group
Assuming the 90 days horizon Telenor ASA is expected to generate 0.77 times more return on investment than Vodacom Group. However, Telenor ASA is 1.29 times less risky than Vodacom Group. It trades about 0.39 of its potential returns per unit of risk. Vodacom Group Ltd is currently generating about 0.27 per unit of risk. If you would invest 1,081 in Telenor ASA on November 3, 2024 and sell it today you would earn a total of 115.00 from holding Telenor ASA or generate 10.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telenor ASA vs. Vodacom Group Ltd
Performance |
| Timeline |
| Telenor ASA |
| Vodacom Group |
Telenor ASA and Vodacom Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telenor ASA and Vodacom Group
The main advantage of trading using opposite Telenor ASA and Vodacom Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telenor ASA position performs unexpectedly, Vodacom 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 Vodacom Group will offset losses from the drop in Vodacom Group's long position.| Telenor ASA vs. ATT Inc | Telenor ASA vs. Verizon Communications | Telenor ASA vs. MTN Group Ltd | Telenor ASA vs. XL Axiata Tbk |
| Vodacom Group vs. XL Axiata Tbk | Vodacom Group vs. Telenor ASA ADR | Vodacom Group vs. Tele2 AB | Vodacom Group vs. MTN Group Ltd |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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