Correlation Between Deutsche Telekom and Pegasus Tel

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

Diversification Opportunities for Deutsche Telekom and Pegasus Tel

-0.53

Correlation Coefficient

Deutsche Telekom  Pegasus Tel

Excellent diversification

The 3 months correlation between Deutsche and Pegasus is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and Pegasus Tel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasus Tel 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 Pegasus Tel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasus Tel has no effect on the direction of Deutsche Telekom i.e., Deutsche Telekom and Pegasus Tel go up and down completely randomly.

Pair Corralation between Deutsche Telekom and Pegasus Tel

Assuming the 90 days horizon Deutsche Telekom AG is expected to generate 0.24 times more return on investment than Pegasus Tel. However, Deutsche Telekom AG is 4.22 times less risky than Pegasus Tel. It trades about 0.21 of its potential returns per unit of risk. Pegasus Tel is currently generating about 0.04 per unit of risk. If you would invest  3,000  in Deutsche Telekom AG on September 6, 2024 and sell it today you would earn a total of  255.00  from holding Deutsche Telekom AG or generate 8.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Deutsche Telekom AG  vs.  Pegasus Tel

Deutsche Telekom

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Telekom AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Deutsche Telekom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pegasus Tel

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Pegasus Tel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Pegasus Tel is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Deutsche Telekom and Pegasus Tel

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

The idea behind Deutsche Telekom AG and Pegasus Tel 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.