Correlation Between Tele2 AB and TelstraLimited
Can any of the company-specific risk be diversified away by investing in both Tele2 AB and TelstraLimited 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 TelstraLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tele2 AB and Telstra Limited, you can compare the effects of market volatilities on Tele2 AB and TelstraLimited 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 TelstraLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tele2 AB and TelstraLimited.
Diversification Opportunities for Tele2 AB and TelstraLimited
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tele2 and TelstraLimited is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tele2 AB and Telstra Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telstra Limited 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 TelstraLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telstra Limited has no effect on the direction of Tele2 AB i.e., Tele2 AB and TelstraLimited go up and down completely randomly.
Pair Corralation between Tele2 AB and TelstraLimited
Assuming the 90 days horizon Tele2 AB is expected to under-perform the TelstraLimited. In addition to that, Tele2 AB is 1.16 times more volatile than Telstra Limited. It trades about -0.17 of its total potential returns per unit of risk. Telstra Limited is currently generating about 0.0 per unit of volatility. If you would invest 240.00 in Telstra Limited on August 25, 2024 and sell it today you would lose (2.00) from holding Telstra Limited or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tele2 AB vs. Telstra Limited
Performance |
| Timeline |
| Tele2 AB |
| Telstra Limited |
Tele2 AB and TelstraLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tele2 AB and TelstraLimited
The main advantage of trading using opposite Tele2 AB and TelstraLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tele2 AB position performs unexpectedly, TelstraLimited 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 TelstraLimited will offset losses from the drop in TelstraLimited'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 |
| TelstraLimited vs. Proximus NV ADR | TelstraLimited vs. Singapore Telecommunications Limited | TelstraLimited vs. MTN Group Ltd | TelstraLimited vs. Tele2 AB |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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