Correlation Between Airtel Africa and COMSovereign Holding

Can any of the company-specific risk be diversified away by investing in both Airtel Africa and COMSovereign Holding 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 Airtel Africa and COMSovereign Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Airtel Africa Plc and COMSovereign Holding Corp, you can compare the effects of market volatilities on Airtel Africa and COMSovereign Holding 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 Airtel Africa with a short position of COMSovereign Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airtel Africa and COMSovereign Holding.

Diversification Opportunities for Airtel Africa and COMSovereign Holding

0.33

Correlation Coefficient

Airtel Africa  COMSovereign Holding

Weak diversification

The 3 months correlation between Airtel and COMSovereign is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Airtel Africa Plc and COMSovereign Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMSovereign Holding Corp and Airtel Africa 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 Airtel Africa Plc are associated (or correlated) with COMSovereign Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMSovereign Holding Corp has no effect on the direction of Airtel Africa i.e., Airtel Africa and COMSovereign Holding go up and down completely randomly.

Pair Corralation between Airtel Africa and COMSovereign Holding

Assuming the 90 days horizon Airtel Africa Plc is expected to generate 0.81 times more return on investment than COMSovereign Holding. However, Airtel Africa Plc is 1.24 times less risky than COMSovereign Holding. It trades about 0.02 of its potential returns per unit of risk. COMSovereign Holding Corp is currently generating about -0.01 per unit of risk. If you would invest  133.00  in Airtel Africa Plc on October 5, 2024 and sell it today you would lose (8.00) from holding Airtel Africa Plc or give up 6.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	20.04%
Values	Daily Returns

Airtel Africa Plc  vs.  COMSovereign Holding Corp

Airtel Africa Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Airtel Africa Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COMSovereign Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMSovereign Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, COMSovereign Holding is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Airtel Africa and COMSovereign Holding

The main advantage of trading using opposite Airtel Africa and COMSovereign Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airtel Africa position performs unexpectedly, COMSovereign Holding 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 COMSovereign Holding will offset losses from the drop in COMSovereign Holding's long position.

The idea behind Airtel Africa Plc and COMSovereign Holding Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.