Correlation Between Deutsche Telekom and Amundi CAC

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

By analyzing existing cross correlation between Deutsche Telekom AG and Amundi CAC 40, you can compare the effects of market volatilities on Deutsche Telekom and Amundi CAC 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 Deutsche Telekom with a short position of Amundi CAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and Amundi CAC.

Diversification Opportunities for Deutsche Telekom and Amundi CAC

-0.7

Correlation Coefficient

Deutsche Telekom  Amundi CAC

Excellent diversification

The 3 months correlation between Deutsche and Amundi is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and Amundi CAC 40 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi CAC 40 and Deutsche Telekom 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 Deutsche Telekom AG are associated (or correlated) with Amundi CAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi CAC 40 has no effect on the direction of Deutsche Telekom i.e., Deutsche Telekom and Amundi CAC go up and down completely randomly.

Pair Corralation between Deutsche Telekom and Amundi CAC

Assuming the 90 days horizon Deutsche Telekom AG is expected to generate 1.0 times more return on investment than Amundi CAC. However, Deutsche Telekom AG is 1.0 times less risky than Amundi CAC. It trades about 0.28 of its potential returns per unit of risk. Amundi CAC 40 is currently generating about -0.07 per unit of risk. If you would invest  2,577  in Deutsche Telekom AG on September 3, 2024 and sell it today you would earn a total of  450.00  from holding Deutsche Telekom AG or generate 17.46% return on investment over 90 days.

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

Deutsche Telekom AG  vs.  Amundi CAC 40

Deutsche Telekom

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Telekom AG are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Deutsche Telekom reported solid returns over the last few months and may actually be approaching a breakup point.

Amundi CAC 40

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi CAC 40 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Amundi CAC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Deutsche Telekom and Amundi CAC

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

The idea behind Deutsche Telekom AG and Amundi CAC 40 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.