Correlation Between Telenor ASA and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both Telenor ASA and Lumen Technologies 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 Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telenor ASA ADR and Lumen Technologies, you can compare the effects of market volatilities on Telenor ASA and Lumen Technologies 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 Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telenor ASA and Lumen Technologies.
Diversification Opportunities for Telenor ASA and Lumen Technologies
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Telenor and Lumen is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA ADR and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies 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 ADR are associated (or correlated) with Lumen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies has no effect on the direction of Telenor ASA i.e., Telenor ASA and Lumen Technologies go up and down completely randomly.
Pair Corralation between Telenor ASA and Lumen Technologies
Assuming the 90 days horizon Telenor ASA is expected to generate 73.54 times less return on investment than Lumen Technologies. But when comparing it to its historical volatility, Telenor ASA ADR is 3.1 times less risky than Lumen Technologies. It trades about 0.01 of its potential returns per unit of risk. Lumen Technologies is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 641.00 in Lumen Technologies on August 29, 2024 and sell it today you would earn a total of 124.00 from holding Lumen Technologies or generate 19.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telenor ASA ADR vs. Lumen Technologies
Performance |
| Timeline |
| Telenor ASA ADR |
| Lumen Technologies |
Telenor ASA and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telenor ASA and Lumen Technologies
The main advantage of trading using opposite Telenor ASA and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telenor ASA position performs unexpectedly, Lumen Technologies 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 Lumen Technologies will offset losses from the drop in Lumen Technologies' long position.| Telenor ASA vs. HUMANA INC | Telenor ASA vs. SCOR PK | Telenor ASA vs. Aquagold International | Telenor ASA vs. Barloworld Ltd ADR |
| Lumen Technologies vs. Liberty Broadband Srs | Lumen Technologies vs. Ribbon Communications | Lumen Technologies vs. Liberty Broadband Srs | Lumen Technologies vs. Shenandoah Telecommunications Co |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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