Correlation Between Magyar Telekom and Nutex Investments

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

Diversification Opportunities for Magyar Telekom and Nutex Investments

MagyarNutexDiversified AwayMagyarNutexDiversified Away100%
0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Magyar and Nutex is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Telekom PLC and Nutex Investments PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutex Investments PLC 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 Nutex Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutex Investments PLC has no effect on the direction of Magyar Telekom i.e., Magyar Telekom and Nutex Investments go up and down completely randomly.

Pair Corralation between Magyar Telekom and Nutex Investments

Assuming the 90 days trading horizon Magyar Telekom is expected to generate 1.35 times less return on investment than Nutex Investments. But when comparing it to its historical volatility, Magyar Telekom PLC is 5.39 times less risky than Nutex Investments. It trades about 0.37 of its potential returns per unit of risk. Nutex Investments PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,945  in Nutex Investments PLC on September 15, 2024 and sell it today you would earn a total of  515.00  from holding Nutex Investments PLC or generate 26.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.44%
ValuesDaily Returns

Magyar Telekom PLC  vs.  Nutex Investments PLC

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -50510152025
JavaScript chart by amCharts 3.21.15MTEL NUTEX
       Timeline  
Magyar Telekom PLC 

Risk-Adjusted Performance

29 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1,0501,1001,1501,2001,2501,300
Nutex Investments PLC 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Nutex Investments PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Nutex Investments sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec182022242628

Magyar Telekom and Nutex Investments Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.75-2.06-1.37-0.680.00.821.662.493.33 0.10.20.30.4
JavaScript chart by amCharts 3.21.15MTEL NUTEX
       Returns  

Pair Trading with Magyar Telekom and Nutex Investments

The main advantage of trading using opposite Magyar Telekom and Nutex Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magyar Telekom position performs unexpectedly, Nutex Investments 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 Nutex Investments will offset losses from the drop in Nutex Investments' long position.
The idea behind Magyar Telekom PLC and Nutex Investments PLC 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.
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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