Correlation Between Tele2 AB and Magyar Telekom
Can any of the company-specific risk be diversified away by investing in both Tele2 AB 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 Tele2 AB and Magyar Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tele2 AB and Magyar Telekom Plc, you can compare the effects of market volatilities on Tele2 AB 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 Tele2 AB with a short position of Magyar Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tele2 AB and Magyar Telekom.
Diversification Opportunities for Tele2 AB and Magyar Telekom
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tele2 and Magyar is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tele2 AB 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 Tele2 AB 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 Tele2 AB 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 Tele2 AB i.e., Tele2 AB and Magyar Telekom go up and down completely randomly.
Pair Corralation between Tele2 AB and Magyar Telekom
Assuming the 90 days horizon Tele2 AB is expected to generate 1.51 times less return on investment than Magyar Telekom. But when comparing it to its historical volatility, Tele2 AB is 1.39 times less risky than Magyar Telekom. It trades about 0.23 of its potential returns per unit of risk. Magyar Telekom Plc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,798 in Magyar Telekom Plc on November 27, 2024 and sell it today you would earn a total of 162.00 from holding Magyar Telekom Plc or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tele2 AB vs. Magyar Telekom Plc
Performance |
| Timeline |
| Tele2 AB |
| Magyar Telekom Plc |
Tele2 AB and Magyar Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tele2 AB and Magyar Telekom
The main advantage of trading using opposite Tele2 AB and Magyar Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tele2 AB 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.| Tele2 AB vs. Proximus NV ADR | Tele2 AB vs. Telstra Limited | Tele2 AB vs. Singapore Telecommunications Limited | Tele2 AB vs. Vodafone Group PLC |
| Magyar Telekom vs. SwissCom AG | Magyar Telekom vs. Hellenic Telecommunications Org | Magyar Telekom vs. Telefonica SA ADR | Magyar Telekom vs. Lumen Technologies |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |