Correlation Between Amrica Mvil, and Airtel Africa

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

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

Diversification Opportunities for Amrica Mvil, and Airtel Africa

0.27

Correlation Coefficient

Amrica Mvil,  Airtel Africa

Modest diversification

The 3 months correlation between Amrica and Airtel is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Amrica Mvil, SAB and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc and Amrica Mvil, 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 Amrica Mvil, SAB are associated (or correlated) with Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of Amrica Mvil, i.e., Amrica Mvil, and Airtel Africa go up and down completely randomly.

Pair Corralation between Amrica Mvil, and Airtel Africa

Assuming the 90 days horizon Amrica Mvil, is expected to generate 5.19 times less return on investment than Airtel Africa. But when comparing it to its historical volatility, Amrica Mvil, SAB is 3.09 times less risky than Airtel Africa. It trades about 0.09 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Airtel Africa Plc on October 22, 2024 and sell it today you would earn a total of  23.00  from holding Airtel Africa Plc or generate 18.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Amrica Mvil, SAB  vs.  Airtel Africa Plc

Amrica Mvil, SAB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amrica Mvil, SAB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Amrica Mvil, reported solid returns over the last few months and may actually be approaching a breakup point.

Airtel Africa Plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Airtel Africa Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Airtel Africa may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Amrica Mvil, and Airtel Africa

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

The idea behind Amrica Mvil, SAB and Airtel Africa Plc 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.