Correlation Between CeoTronics and T MOBILE

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

By analyzing existing cross correlation between CeoTronics AG and T MOBILE US, you can compare the effects of market volatilities on CeoTronics and T MOBILE 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 CeoTronics with a short position of T MOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CeoTronics and T MOBILE.

Diversification Opportunities for CeoTronics and T MOBILE

0.49

Correlation Coefficient

CeoTronics  T MOBILE

Very weak diversification

The 3 months correlation between CeoTronics and TM5 is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and T MOBILE US in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T MOBILE US and CeoTronics 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 CeoTronics AG are associated (or correlated) with T MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T MOBILE US has no effect on the direction of CeoTronics i.e., CeoTronics and T MOBILE go up and down completely randomly.

Pair Corralation between CeoTronics and T MOBILE

Assuming the 90 days trading horizon CeoTronics is expected to generate 1.9 times less return on investment than T MOBILE. In addition to that, CeoTronics is 1.75 times more volatile than T MOBILE US. It trades about 0.04 of its total potential returns per unit of risk. T MOBILE US is currently generating about 0.15 per unit of volatility. If you would invest  18,540  in T MOBILE US on September 29, 2024 and sell it today you would earn a total of  2,750  from holding T MOBILE US or generate 14.83% return on investment over 90 days.

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

CeoTronics AG  vs.  T MOBILE US

CeoTronics AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, CeoTronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

T MOBILE US

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE US are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, T MOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CeoTronics and T MOBILE

The main advantage of trading using opposite CeoTronics and T MOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CeoTronics position performs unexpectedly, T MOBILE 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 T MOBILE will offset losses from the drop in T MOBILE's long position.

The idea behind CeoTronics AG and T MOBILE US 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 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.