Correlation Between KonaTel and Telenor ASA

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

By analyzing existing cross correlation between KonaTel and Telenor ASA ADR, you can compare the effects of market volatilities on KonaTel and Telenor ASA 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 KonaTel with a short position of Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of KonaTel and Telenor ASA.

Diversification Opportunities for KonaTel and Telenor ASA

0.68

Correlation Coefficient

KonaTel  Telenor ASA

Poor diversification

The 3 months correlation between KonaTel and Telenor is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KonaTel and Telenor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA ADR and KonaTel 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 KonaTel are associated (or correlated) with Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA ADR has no effect on the direction of KonaTel i.e., KonaTel and Telenor ASA go up and down completely randomly.

Pair Corralation between KonaTel and Telenor ASA

Given the investment horizon of 90 days KonaTel is expected to under-perform the Telenor ASA. In addition to that, KonaTel is 6.09 times more volatile than Telenor ASA ADR. It trades about -0.05 of its total potential returns per unit of risk. Telenor ASA ADR is currently generating about 0.05 per unit of volatility. If you would invest  989.00  in Telenor ASA ADR on October 2, 2024 and sell it today you would earn a total of  126.00  from holding Telenor ASA ADR or generate 12.74% return on investment over 90 days.

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

KonaTel  vs.  Telenor ASA ADR

KonaTel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KonaTel 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 quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Telenor ASA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telenor ASA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with KonaTel and Telenor ASA

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

The idea behind KonaTel and Telenor ASA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.