Correlation Between Deutsche Telekom and MTN Group

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

Diversification Opportunities for Deutsche Telekom and MTN Group

0.0

Correlation Coefficient

Deutsche Telekom  MTN Group

Pay attention - limited upside

The 3 months correlation between Deutsche and MTN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and MTN Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN Group Limited 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 MTN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN Group Limited has no effect on the direction of Deutsche Telekom i.e., Deutsche Telekom and MTN Group go up and down completely randomly.

Pair Corralation between Deutsche Telekom and MTN Group

If you would invest (100.00) in Deutsche Telekom AG on December 21, 2024 and sell it today you would earn a total of  100.00  from holding Deutsche Telekom AG or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Deutsche Telekom AG  vs.  MTN Group Limited

Deutsche Telekom

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deutsche Telekom AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Deutsche Telekom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MTN Group Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MTN Group Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, MTN Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Telekom and MTN Group

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

The idea behind Deutsche Telekom AG and MTN Group Limited 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.