Correlation Between Telecom Argentina and Magyar Telekom
Can any of the company-specific risk be diversified away by investing in both Telecom Argentina and Magyar Telekom 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 Telecom Argentina and Magyar Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Argentina SA and Magyar Telekom Plc, you can compare the effects of market volatilities on Telecom Argentina and Magyar Telekom 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 Telecom Argentina with a short position of Magyar Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and Magyar Telekom.
Diversification Opportunities for Telecom Argentina and Magyar Telekom
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Telecom and Magyar is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina SA and Magyar Telekom Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Telekom Plc and Telecom Argentina 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 Telecom Argentina SA are associated (or correlated) with Magyar Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Telekom Plc has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Magyar Telekom go up and down completely randomly.
Pair Corralation between Telecom Argentina and Magyar Telekom
Considering the 90-day investment horizon Telecom Argentina SA is expected to generate 2.18 times more return on investment than Magyar Telekom. However, Telecom Argentina is 2.18 times more volatile than Magyar Telekom Plc. It trades about 0.41 of its potential returns per unit of risk. Magyar Telekom Plc is currently generating about 0.17 per unit of risk. If you would invest 954.00 in Telecom Argentina SA on September 3, 2024 and sell it today you would earn a total of 402.00 from holding Telecom Argentina SA or generate 42.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Argentina SA vs. Magyar Telekom Plc
Performance |
| Timeline |
| Telecom Argentina |
| Magyar Telekom Plc |
Telecom Argentina and Magyar Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Argentina and Magyar Telekom
The main advantage of trading using opposite Telecom Argentina and Magyar Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Argentina position performs unexpectedly, Magyar Telekom 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 Magyar Telekom will offset losses from the drop in Magyar Telekom's long position.| Telecom Argentina vs. Telefonica SA ADR | Telecom Argentina vs. Orange SA ADR | Telecom Argentina vs. SK Telecom Co | Telecom Argentina vs. America Movil SAB |
| Magyar Telekom vs. Telefonica Brasil SA | Magyar Telekom vs. Vodafone Group PLC | Magyar Telekom vs. Grupo Televisa SAB | Magyar Telekom vs. America Movil SAB |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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