Correlation Between Deutsche Telekom and Ichor Coal

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

Diversification Opportunities for Deutsche Telekom and Ichor Coal

-0.79

Correlation Coefficient

Deutsche Telekom  Ichor Coal

Pay attention - limited upside

The 3 months correlation between Deutsche and Ichor is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and Ichor Coal NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Coal NV 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 Ichor Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Coal NV has no effect on the direction of Deutsche Telekom i.e., Deutsche Telekom and Ichor Coal go up and down completely randomly.

Pair Corralation between Deutsche Telekom and Ichor Coal

Assuming the 90 days trading horizon Deutsche Telekom AG is expected to generate 0.2 times more return on investment than Ichor Coal. However, Deutsche Telekom AG is 5.05 times less risky than Ichor Coal. It trades about 0.13 of its potential returns per unit of risk. Ichor Coal NV is currently generating about 0.02 per unit of risk. If you would invest  2,714  in Deutsche Telekom AG on October 11, 2024 and sell it today you would earn a total of  195.00  from holding Deutsche Telekom AG or generate 7.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.22%
Values	Daily Returns

Deutsche Telekom AG  vs.  Ichor Coal NV

Deutsche Telekom

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Telekom AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Deutsche Telekom may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ichor Coal NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ichor Coal NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Ichor Coal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Deutsche Telekom and Ichor Coal

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

The idea behind Deutsche Telekom AG and Ichor Coal NV 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.