Correlation Between Eutelsat Communications and Avenir Telecom
Can any of the company-specific risk be diversified away by investing in both Eutelsat Communications and Avenir Telecom 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 Eutelsat Communications and Avenir Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eutelsat Communications SA and Avenir Telecom SA, you can compare the effects of market volatilities on Eutelsat Communications and Avenir Telecom 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 Eutelsat Communications with a short position of Avenir Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eutelsat Communications and Avenir Telecom.
Diversification Opportunities for Eutelsat Communications and Avenir Telecom
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eutelsat and Avenir is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Eutelsat Communications SA and Avenir Telecom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avenir Telecom SA and Eutelsat Communications 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 Eutelsat Communications SA are associated (or correlated) with Avenir Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avenir Telecom SA has no effect on the direction of Eutelsat Communications i.e., Eutelsat Communications and Avenir Telecom go up and down completely randomly.
Pair Corralation between Eutelsat Communications and Avenir Telecom
Assuming the 90 days trading horizon Eutelsat Communications SA is expected to under-perform the Avenir Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Eutelsat Communications SA is 2.77 times less risky than Avenir Telecom. The stock trades about -0.06 of its potential returns per unit of risk. The Avenir Telecom SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9.55 in Avenir Telecom SA on September 10, 2024 and sell it today you would lose (2.34) from holding Avenir Telecom SA or give up 24.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Eutelsat Communications SA vs. Avenir Telecom SA
Performance |
Timeline |
Eutelsat Communications |
Avenir Telecom SA |
Eutelsat Communications and Avenir Telecom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eutelsat Communications and Avenir Telecom
The main advantage of trading using opposite Eutelsat Communications and Avenir Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eutelsat Communications position performs unexpectedly, Avenir Telecom 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 Avenir Telecom will offset losses from the drop in Avenir Telecom's long position.Eutelsat Communications vs. SES S A | Eutelsat Communications vs. Rubis SCA | Eutelsat Communications vs. Coface SA | Eutelsat Communications vs. SCOR SE |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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