Correlation Between Magyar Telekom and ALTEO Energiaszolgalta

Can any of the company-specific risk be diversified away by investing in both Magyar Telekom and ALTEO Energiaszolgalta 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 ALTEO Energiaszolgalta 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 ALTEO Energiaszolgaltato Nyrt, you can compare the effects of market volatilities on Magyar Telekom and ALTEO Energiaszolgalta 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 ALTEO Energiaszolgalta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magyar Telekom and ALTEO Energiaszolgalta.

Diversification Opportunities for Magyar Telekom and ALTEO Energiaszolgalta

-0.82

Correlation Coefficient

Magyar Telekom  ALTEO Energiaszolgalta

Pay attention - limited upside

The 3 months correlation between Magyar and ALTEO is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Telekom PLC and ALTEO Energiaszolgaltato Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTEO Energiaszolgalta 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 ALTEO Energiaszolgalta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTEO Energiaszolgalta has no effect on the direction of Magyar Telekom i.e., Magyar Telekom and ALTEO Energiaszolgalta go up and down completely randomly.

Pair Corralation between Magyar Telekom and ALTEO Energiaszolgalta

Assuming the 90 days trading horizon Magyar Telekom PLC is expected to generate 0.63 times more return on investment than ALTEO Energiaszolgalta. However, Magyar Telekom PLC is 1.58 times less risky than ALTEO Energiaszolgalta. It trades about 0.22 of its potential returns per unit of risk. ALTEO Energiaszolgaltato Nyrt is currently generating about 0.09 per unit of risk. If you would invest  61,300  in Magyar Telekom PLC on September 14, 2024 and sell it today you would earn a total of  67,100  from holding Magyar Telekom PLC or generate 109.46% return on investment over 90 days.

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

Magyar Telekom PLC  vs.  ALTEO Energiaszolgaltato Nyrt

Magyar Telekom PLC

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Magyar Telekom PLC are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Magyar Telekom unveiled solid returns over the last few months and may actually be approaching a breakup point.

ALTEO Energiaszolgalta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALTEO Energiaszolgaltato Nyrt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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 Magyar Telekom and ALTEO Energiaszolgalta

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

The idea behind Magyar Telekom PLC and ALTEO Energiaszolgaltato 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.