Correlation Between ATN International and Telenor ASA

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

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

Diversification Opportunities for ATN International and Telenor ASA

0.63

Correlation Coefficient

ATN International  Telenor ASA

Poor diversification

The 3 months correlation between ATN and Telenor is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ATN International and Telenor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA and ATN International 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 ATN International are associated (or correlated) with Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA has no effect on the direction of ATN International i.e., ATN International and Telenor ASA go up and down completely randomly.

Pair Corralation between ATN International and Telenor ASA

Given the investment horizon of 90 days ATN International is expected to under-perform the Telenor ASA. In addition to that, ATN International is 1.43 times more volatile than Telenor ASA. It trades about -0.57 of its total potential returns per unit of risk. Telenor ASA is currently generating about -0.35 per unit of volatility. If you would invest  1,166  in Telenor ASA on September 25, 2024 and sell it today you would lose (85.00) from holding Telenor ASA or give up 7.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

ATN International  vs.  Telenor ASA

ATN International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATN International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Telenor ASA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ATN International and Telenor ASA

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

The idea behind ATN International and Telenor ASA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.