Correlation Between Vale SA and Cellnex Telecom
Can any of the company-specific risk be diversified away by investing in both Vale SA and Cellnex Telecom 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 Vale SA and Cellnex Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and Cellnex Telecom SA, you can compare the effects of market volatilities on Vale SA and Cellnex Telecom 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 Vale SA with a short position of Cellnex Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Cellnex Telecom.
Diversification Opportunities for Vale SA and Cellnex Telecom
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vale and Cellnex is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Cellnex Telecom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellnex Telecom SA and Vale SA 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 Vale SA are associated (or correlated) with Cellnex Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellnex Telecom SA has no effect on the direction of Vale SA i.e., Vale SA and Cellnex Telecom go up and down completely randomly.
Pair Corralation between Vale SA and Cellnex Telecom
Assuming the 90 days trading horizon Vale SA is expected to generate 1.44 times less return on investment than Cellnex Telecom. But when comparing it to its historical volatility, Vale SA is 1.43 times less risky than Cellnex Telecom. It trades about 0.09 of its potential returns per unit of risk. Cellnex Telecom SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,118 in Cellnex Telecom SA on November 3, 2024 and sell it today you would earn a total of 121.00 from holding Cellnex Telecom SA or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vale SA vs. Cellnex Telecom SA
Performance |
| Timeline |
| Vale SA |
| Cellnex Telecom SA |
Vale SA and Cellnex Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Cellnex Telecom
The main advantage of trading using opposite Vale SA and Cellnex Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA position performs unexpectedly, Cellnex Telecom 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 Cellnex Telecom will offset losses from the drop in Cellnex Telecom's long position.| Vale SA vs. All Iron Re | Vale SA vs. Arrienda Rental Properties | Vale SA vs. Bankinter | Vale SA vs. Inhome Prime Properties |
| Cellnex Telecom vs. Grifols SA | Cellnex Telecom vs. Aena SA | Cellnex Telecom vs. ACS Actividades de | Cellnex Telecom vs. Ferrovial 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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