Correlation Between Comba Telecom and Antofagasta Plc

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

By analyzing existing cross correlation between Comba Telecom Systems and Antofagasta plc, you can compare the effects of market volatilities on Comba Telecom and Antofagasta Plc 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 Comba Telecom with a short position of Antofagasta Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comba Telecom and Antofagasta Plc.

Diversification Opportunities for Comba Telecom and Antofagasta Plc

0.63

Correlation Coefficient

Comba Telecom  Antofagasta Plc

Poor diversification

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

Pair Corralation between Comba Telecom and Antofagasta Plc

Assuming the 90 days trading horizon Comba Telecom Systems is expected to generate 1.97 times more return on investment than Antofagasta Plc. However, Comba Telecom is 1.97 times more volatile than Antofagasta plc. It trades about 0.05 of its potential returns per unit of risk. Antofagasta plc is currently generating about -0.05 per unit of risk. If you would invest  12.00  in Comba Telecom Systems on September 21, 2024 and sell it today you would earn a total of  1.00  from holding Comba Telecom Systems or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Comba Telecom Systems  vs.  Antofagasta plc

Comba Telecom Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comba Telecom Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Comba Telecom unveiled solid returns over the last few months and may actually be approaching a breakup point.

Antofagasta plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antofagasta plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Comba Telecom and Antofagasta Plc

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

The idea behind Comba Telecom Systems and Antofagasta plc 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.