Correlation Between Hellenic Telecommunicatio and Telefonica

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

By analyzing existing cross correlation between Hellenic Telecommunications Org and Telefonica SA ADR, you can compare the effects of market volatilities on Hellenic Telecommunicatio and Telefonica 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 Hellenic Telecommunicatio with a short position of Telefonica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hellenic Telecommunicatio and Telefonica.

Diversification Opportunities for Hellenic Telecommunicatio and Telefonica

0.84

Correlation Coefficient

Hellenic Telecommunicatio  Telefonica

Very poor diversification

The 3 months correlation between Hellenic and Telefonica is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hellenic Telecommunications Or and Telefonica SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica SA ADR and Hellenic Telecommunicatio 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 Hellenic Telecommunications Org are associated (or correlated) with Telefonica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica SA ADR has no effect on the direction of Hellenic Telecommunicatio i.e., Hellenic Telecommunicatio and Telefonica go up and down completely randomly.

Pair Corralation between Hellenic Telecommunicatio and Telefonica

Assuming the 90 days horizon Hellenic Telecommunications Org is expected to generate 1.77 times more return on investment than Telefonica. However, Hellenic Telecommunicatio is 1.77 times more volatile than Telefonica SA ADR. It trades about -0.12 of its potential returns per unit of risk. Telefonica SA ADR is currently generating about -0.22 per unit of risk. If you would invest  863.00  in Hellenic Telecommunications Org on September 27, 2024 and sell it today you would lose (121.00) from holding Hellenic Telecommunications Org or give up 14.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Hellenic Telecommunications Or  vs.  Telefonica SA ADR

Hellenic Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hellenic Telecommunications Org has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Telefonica SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telefonica SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hellenic Telecommunicatio and Telefonica

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

The idea behind Hellenic Telecommunications Org and Telefonica SA ADR 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.