Correlation Between VEON and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both VEON and Consolidated Communications 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 VEON and Consolidated Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VEON and Consolidated Communications, you can compare the effects of market volatilities on VEON and Consolidated Communications 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 VEON with a short position of Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of VEON and Consolidated Communications.
Diversification Opportunities for VEON and Consolidated Communications
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VEON and Consolidated is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding VEON and Consolidated Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications and VEON 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 VEON are associated (or correlated) with Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of VEON i.e., VEON and Consolidated Communications go up and down completely randomly.
Pair Corralation between VEON and Consolidated Communications
Given the investment horizon of 90 days VEON is expected to generate 7.95 times more return on investment than Consolidated Communications. However, VEON is 7.95 times more volatile than Consolidated Communications. It trades about 0.03 of its potential returns per unit of risk. Consolidated Communications is currently generating about 0.0 per unit of risk. If you would invest 3,069 in VEON on August 23, 2024 and sell it today you would earn a total of 31.00 from holding VEON or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VEON vs. Consolidated Communications
Performance |
| Timeline |
| VEON |
| Consolidated Communications |
VEON and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VEON and Consolidated Communications
The main advantage of trading using opposite VEON and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VEON position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.| VEON vs. Telecom Argentina SA | VEON vs. Telkom Indonesia Tbk | VEON vs. PLDT Inc ADR | VEON vs. Telefonica Brasil SA |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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