Correlation Between Avenir Telecom and Compagnie

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

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

Diversification Opportunities for Avenir Telecom and Compagnie

-0.25

Correlation Coefficient

Avenir Telecom  Compagnie

Very good diversification

The 3 months correlation between Avenir and Compagnie is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Avenir Telecom SA and Compagnie du Cambodge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie du Cambodge and Avenir Telecom 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 Avenir Telecom SA are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie du Cambodge has no effect on the direction of Avenir Telecom i.e., Avenir Telecom and Compagnie go up and down completely randomly.

Pair Corralation between Avenir Telecom and Compagnie

Assuming the 90 days trading horizon Avenir Telecom SA is expected to under-perform the Compagnie. In addition to that, Avenir Telecom is 1.11 times more volatile than Compagnie du Cambodge. It trades about -0.27 of its total potential returns per unit of risk. Compagnie du Cambodge is currently generating about 0.11 per unit of volatility. If you would invest  10,100  in Compagnie du Cambodge on December 22, 2024 and sell it today you would earn a total of  2,150  from holding Compagnie du Cambodge or generate 21.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Avenir Telecom SA  vs.  Compagnie du Cambodge

Avenir Telecom SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avenir Telecom SA 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 somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Compagnie du Cambodge

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie du Cambodge are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avenir Telecom and Compagnie

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

The idea behind Avenir Telecom SA and Compagnie du Cambodge 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 Stocks Directory module to find actively traded stocks across global markets.