Correlation Between Este Lauder and Telekom Austria

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

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

Diversification Opportunities for Este Lauder and Telekom Austria

-0.71

Correlation Coefficient

Este Lauder  Telekom Austria

Pay attention - limited upside

The 3 months correlation between Este and Telekom is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding The Este Lauder and Telekom Austria AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telekom Austria AG and Este Lauder 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 The Este Lauder are associated (or correlated) with Telekom Austria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telekom Austria AG has no effect on the direction of Este Lauder i.e., Este Lauder and Telekom Austria go up and down completely randomly.

Pair Corralation between Este Lauder and Telekom Austria

Assuming the 90 days trading horizon The Este Lauder is expected to under-perform the Telekom Austria. In addition to that, Este Lauder is 2.93 times more volatile than Telekom Austria AG. It trades about -0.05 of its total potential returns per unit of risk. Telekom Austria AG is currently generating about 0.12 per unit of volatility. If you would invest  796.00  in Telekom Austria AG on December 29, 2024 and sell it today you would earn a total of  68.00  from holding Telekom Austria AG or generate 8.54% return on investment over 90 days.

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

The Este Lauder  vs.  Telekom Austria AG

Este Lauder

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Este Lauder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Telekom Austria AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telekom Austria AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Telekom Austria may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Este Lauder and Telekom Austria

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

The idea behind The Este Lauder and Telekom Austria AG 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.