Correlation Between DISH Network and Airtel Africa

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

By analyzing existing cross correlation between DISH Network and Airtel Africa Plc, you can compare the effects of market volatilities on DISH Network and Airtel Africa 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 DISH Network with a short position of Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of DISH Network and Airtel Africa.

Diversification Opportunities for DISH Network and Airtel Africa

0.02

Correlation Coefficient

DISH Network  Airtel Africa

Significant diversification

The 3 months correlation between DISH and Airtel is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding DISH Network and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc and DISH Network 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 DISH Network are associated (or correlated) with Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of DISH Network i.e., DISH Network and Airtel Africa go up and down completely randomly.

Pair Corralation between DISH Network and Airtel Africa

Given the investment horizon of 90 days DISH Network is expected to under-perform the Airtel Africa. In addition to that, DISH Network is 1.08 times more volatile than Airtel Africa Plc. It trades about -0.09 of its total potential returns per unit of risk. Airtel Africa Plc is currently generating about 0.02 per unit of volatility. If you would invest  132.00  in Airtel Africa Plc on October 11, 2024 and sell it today you would earn a total of  5.00  from holding Airtel Africa Plc or generate 3.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	25.86%
Values	Daily Returns

DISH Network  vs.  Airtel Africa Plc

DISH Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DISH Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, DISH Network is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Airtel Africa Plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Airtel Africa Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Airtel Africa may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DISH Network and Airtel Africa

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

The idea behind DISH Network and Airtel Africa 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.