Correlation Between Astar and Telecom Italia

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

By analyzing existing cross correlation between Astar and Telecom Italia SpA, you can compare the effects of market volatilities on Astar and Telecom Italia 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 Astar with a short position of Telecom Italia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Telecom Italia.

Diversification Opportunities for Astar and Telecom Italia

0.0

Correlation Coefficient

Astar  Telecom Italia

Pay attention - limited upside

The 3 months correlation between Astar and Telecom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Telecom Italia SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Italia SpA and Astar 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 Astar are associated (or correlated) with Telecom Italia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Italia SpA has no effect on the direction of Astar i.e., Astar and Telecom Italia go up and down completely randomly.

Pair Corralation between Astar and Telecom Italia

Assuming the 90 days trading horizon Astar is expected to under-perform the Telecom Italia. In addition to that, Astar is 1.43 times more volatile than Telecom Italia SpA. It trades about -0.04 of its total potential returns per unit of risk. Telecom Italia SpA is currently generating about 0.02 per unit of volatility. If you would invest  28.00  in Telecom Italia SpA on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Telecom Italia SpA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	85.85%
Values	Daily Returns

Astar  vs.  Telecom Italia SpA

Astar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Telecom Italia SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telecom Italia SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, Telecom Italia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Astar and Telecom Italia

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

The idea behind Astar and Telecom Italia SpA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.