Correlation Between Telekom Austria and UBM Development
Can any of the company-specific risk be diversified away by investing in both Telekom Austria and UBM Development 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 Telekom Austria and UBM Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telekom Austria AG and UBM Development AG, you can compare the effects of market volatilities on Telekom Austria and UBM Development 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 Telekom Austria with a short position of UBM Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telekom Austria and UBM Development.
Diversification Opportunities for Telekom Austria and UBM Development
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Telekom and UBM is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Telekom Austria AG and UBM Development AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBM Development AG and Telekom Austria 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 Telekom Austria AG are associated (or correlated) with UBM Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBM Development AG has no effect on the direction of Telekom Austria i.e., Telekom Austria and UBM Development go up and down completely randomly.
Pair Corralation between Telekom Austria and UBM Development
Assuming the 90 days trading horizon Telekom Austria AG is expected to generate 1.16 times more return on investment than UBM Development. However, Telekom Austria is 1.16 times more volatile than UBM Development AG. It trades about -0.06 of its potential returns per unit of risk. UBM Development AG is currently generating about -0.26 per unit of risk. If you would invest 801.00 in Telekom Austria AG on August 23, 2024 and sell it today you would lose (21.00) from holding Telekom Austria AG or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telekom Austria AG vs. UBM Development AG
Performance |
| Timeline |
| Telekom Austria AG |
| UBM Development AG |
Telekom Austria and UBM Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telekom Austria and UBM Development
The main advantage of trading using opposite Telekom Austria and UBM Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telekom Austria position performs unexpectedly, UBM Development 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 UBM Development will offset losses from the drop in UBM Development's long position.| Telekom Austria vs. Voestalpine AG | Telekom Austria vs. Oesterr Post AG | Telekom Austria vs. Wienerberger AG | Telekom Austria vs. VERBUND AG |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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