Correlation Between Cellnex Telecom and CoStar

Can any of the company-specific risk be diversified away by investing in both Cellnex Telecom and CoStar 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 CoStar 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 CoStar Group, you can compare the effects of market volatilities on Cellnex Telecom and CoStar 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 CoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellnex Telecom and CoStar.

Diversification Opportunities for Cellnex Telecom and CoStar

0.77

Correlation Coefficient

Cellnex Telecom  CoStar

Poor diversification

The 3 months correlation between Cellnex and CoStar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group 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 CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and CoStar go up and down completely randomly.

Pair Corralation between Cellnex Telecom and CoStar

Assuming the 90 days horizon Cellnex Telecom SA is expected to generate 1.31 times more return on investment than CoStar. However, Cellnex Telecom is 1.31 times more volatile than CoStar Group. It trades about -0.01 of its potential returns per unit of risk. CoStar Group is currently generating about -0.04 per unit of risk. If you would invest  3,489  in Cellnex Telecom SA on November 30, 2024 and sell it today you would lose (126.00) from holding Cellnex Telecom SA or give up 3.61% of portfolio value over 90 days.

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

Cellnex Telecom SA  vs.  CoStar Group

Cellnex Telecom SA

Risk-Adjusted Performance

Very Weak

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

CoStar Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days CoStar Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, CoStar is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cellnex Telecom and CoStar

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

The idea behind Cellnex Telecom SA and CoStar Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.