Correlation Between TPG Telecom and Tele2 AB
Can any of the company-specific risk be diversified away by investing in both TPG Telecom and Tele2 AB 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 TPG Telecom and Tele2 AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG Telecom Limited and Tele2 AB, you can compare the effects of market volatilities on TPG Telecom and Tele2 AB 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 TPG Telecom with a short position of Tele2 AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG Telecom and Tele2 AB.
Diversification Opportunities for TPG Telecom and Tele2 AB
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TPG and Tele2 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding TPG Telecom Limited and Tele2 AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tele2 AB and TPG Telecom 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 TPG Telecom Limited are associated (or correlated) with Tele2 AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tele2 AB has no effect on the direction of TPG Telecom i.e., TPG Telecom and Tele2 AB go up and down completely randomly.
Pair Corralation between TPG Telecom and Tele2 AB
Assuming the 90 days horizon TPG Telecom is expected to generate 5.56 times less return on investment than Tele2 AB. But when comparing it to its historical volatility, TPG Telecom Limited is 8.45 times less risky than Tele2 AB. It trades about 0.11 of its potential returns per unit of risk. Tele2 AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 371.00 in Tele2 AB on August 25, 2024 and sell it today you would earn a total of 138.00 from holding Tele2 AB or generate 37.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
TPG Telecom Limited vs. Tele2 AB
Performance |
| Timeline |
| TPG Telecom Limited |
| Tele2 AB |
TPG Telecom and Tele2 AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPG Telecom and Tele2 AB
The main advantage of trading using opposite TPG Telecom and Tele2 AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG Telecom position performs unexpectedly, Tele2 AB 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 Tele2 AB will offset losses from the drop in Tele2 AB's long position.| TPG Telecom vs. Vodafone Group PLC | TPG Telecom vs. KDDI Corp | TPG Telecom vs. Amrica Mvil, SAB | TPG Telecom vs. Singapore Telecommunications Limited |
| Tele2 AB vs. Proximus NV ADR | Tele2 AB vs. Telstra Limited | Tele2 AB vs. Singapore Telecommunications Limited | Tele2 AB vs. Vodafone Group PLC |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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