Correlation Between T-Mobile and Koninklijke KPN
Can any of the company-specific risk be diversified away by investing in both T-Mobile and Koninklijke KPN 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 T-Mobile and Koninklijke KPN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Mobile and Koninklijke KPN NV, you can compare the effects of market volatilities on T-Mobile and Koninklijke KPN 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 T-Mobile with a short position of Koninklijke KPN. Check out your portfolio center. Please also check ongoing floating volatility patterns of T-Mobile and Koninklijke KPN.
Diversification Opportunities for T-Mobile and Koninklijke KPN
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between T-Mobile and Koninklijke is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Koninklijke KPN NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke KPN NV and T-Mobile 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 T Mobile are associated (or correlated) with Koninklijke KPN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke KPN NV has no effect on the direction of T-Mobile i.e., T-Mobile and Koninklijke KPN go up and down completely randomly.
Pair Corralation between T-Mobile and Koninklijke KPN
Assuming the 90 days horizon T Mobile is expected to generate 1.56 times more return on investment than Koninklijke KPN. However, T-Mobile is 1.56 times more volatile than Koninklijke KPN NV. It trades about 0.1 of its potential returns per unit of risk. Koninklijke KPN NV is currently generating about 0.04 per unit of risk. If you would invest 13,407 in T Mobile on November 28, 2024 and sell it today you would earn a total of 12,183 from holding T Mobile or generate 90.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
T Mobile vs. Koninklijke KPN NV
Performance |
| Timeline |
| T Mobile |
| Koninklijke KPN NV |
T-Mobile and Koninklijke KPN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T-Mobile and Koninklijke KPN
The main advantage of trading using opposite T-Mobile and Koninklijke KPN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T-Mobile position performs unexpectedly, Koninklijke KPN 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 Koninklijke KPN will offset losses from the drop in Koninklijke KPN's long position.| T-Mobile vs. CanSino Biologics | T-Mobile vs. ADRIATIC METALS LS 013355 | T-Mobile vs. AUST AGRICULTURAL | T-Mobile vs. CORNISH METALS INC |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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