Correlation Between Cellnex Telecom and Ke Holdings

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

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

Diversification Opportunities for Cellnex Telecom and Ke Holdings

0.72

Correlation Coefficient

Cellnex Telecom  Ke Holdings

Poor diversification

The 3 months correlation between Cellnex and BEKE is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and Ke Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ke Holdings and Cellnex 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 Cellnex Telecom SA are associated (or correlated) with Ke Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ke Holdings has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and Ke Holdings go up and down completely randomly.

Pair Corralation between Cellnex Telecom and Ke Holdings

Assuming the 90 days horizon Cellnex Telecom is expected to generate 1.54 times less return on investment than Ke Holdings. But when comparing it to its historical volatility, Cellnex Telecom SA is 1.72 times less risky than Ke Holdings. It trades about 0.09 of its potential returns per unit of risk. Ke Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,843  in Ke Holdings on December 28, 2024 and sell it today you would earn a total of  276.00  from holding Ke Holdings or generate 14.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Cellnex Telecom SA  vs.  Ke Holdings

Cellnex Telecom SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cellnex Telecom SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Cellnex Telecom may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ke Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ke Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, Ke Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cellnex Telecom and Ke Holdings

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

The idea behind Cellnex Telecom SA and Ke Holdings 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.