Correlation Between Magyar Telekom and AKKO Invest

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

By analyzing existing cross correlation between Magyar Telekom PLC and AKKO Invest Nyrt, you can compare the effects of market volatilities on Magyar Telekom and AKKO Invest 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 Magyar Telekom with a short position of AKKO Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magyar Telekom and AKKO Invest.

Diversification Opportunities for Magyar Telekom and AKKO Invest

-0.19

Correlation Coefficient

Magyar Telekom  AKKO Invest

Good diversification

The 3 months correlation between Magyar and AKKO is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Telekom PLC and AKKO Invest Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKKO Invest Nyrt and Magyar 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 Magyar Telekom PLC are associated (or correlated) with AKKO Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKKO Invest Nyrt has no effect on the direction of Magyar Telekom i.e., Magyar Telekom and AKKO Invest go up and down completely randomly.

Pair Corralation between Magyar Telekom and AKKO Invest

Assuming the 90 days trading horizon Magyar Telekom PLC is expected to generate 1.38 times more return on investment than AKKO Invest. However, Magyar Telekom is 1.38 times more volatile than AKKO Invest Nyrt. It trades about 0.25 of its potential returns per unit of risk. AKKO Invest Nyrt is currently generating about -0.04 per unit of risk. If you would invest  128,400  in Magyar Telekom PLC on December 4, 2024 and sell it today you would earn a total of  40,600  from holding Magyar Telekom PLC or generate 31.62% return on investment over 90 days.

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

Magyar Telekom PLC  vs.  AKKO Invest Nyrt

Magyar Telekom PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Magyar Telekom PLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Magyar Telekom unveiled solid returns over the last few months and may actually be approaching a breakup point.

AKKO Invest Nyrt

Risk-Adjusted Performance

Very Weak

Over the last 90 days AKKO Invest Nyrt has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AKKO Invest is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Magyar Telekom and AKKO Invest

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

The idea behind Magyar Telekom PLC and AKKO Invest Nyrt 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.