Correlation Between Magyar Telekom and Gannett

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

Diversification Opportunities for Magyar Telekom and Gannett

-0.41

Correlation Coefficient

Magyar Telekom  Gannett

Very good diversification

The 3 months correlation between Magyar and Gannett is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Telekom Plc and Gannett Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gannett 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 Gannett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gannett has no effect on the direction of Magyar Telekom i.e., Magyar Telekom and Gannett go up and down completely randomly.

Pair Corralation between Magyar Telekom and Gannett

Assuming the 90 days horizon Magyar Telekom Plc is expected to generate 0.69 times more return on investment than Gannett. However, Magyar Telekom Plc is 1.45 times less risky than Gannett. It trades about 0.09 of its potential returns per unit of risk. Gannett Co is currently generating about 0.0 per unit of risk. If you would invest  1,427  in Magyar Telekom Plc on October 5, 2024 and sell it today you would earn a total of  193.00  from holding Magyar Telekom Plc or generate 13.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Magyar Telekom Plc  vs.  Gannett Co

Magyar Telekom Plc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magyar Telekom Plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Magyar Telekom showed solid returns over the last few months and may actually be approaching a breakup point.

Gannett

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gannett Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Gannett is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Magyar Telekom and Gannett

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

The idea behind Magyar Telekom Plc and Gannett Co 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.