Correlation Between Magyar Telekom and Nippon Telegraph
Can any of the company-specific risk be diversified away by investing in both Magyar Telekom and Nippon Telegraph 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 Nippon Telegraph 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 Nippon Telegraph Telephone, you can compare the effects of market volatilities on Magyar Telekom and Nippon Telegraph 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 Nippon Telegraph. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magyar Telekom and Nippon Telegraph.
Diversification Opportunities for Magyar Telekom and Nippon Telegraph
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magyar and Nippon is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Telekom Plc and Nippon Telegraph Telephone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Telegraph Tel 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 Nippon Telegraph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Telegraph Tel has no effect on the direction of Magyar Telekom i.e., Magyar Telekom and Nippon Telegraph go up and down completely randomly.
Pair Corralation between Magyar Telekom and Nippon Telegraph
Assuming the 90 days horizon Magyar Telekom Plc is expected to generate 0.69 times more return on investment than Nippon Telegraph. However, Magyar Telekom Plc is 1.44 times less risky than Nippon Telegraph. It trades about 0.2 of its potential returns per unit of risk. Nippon Telegraph Telephone is currently generating about 0.02 per unit of risk. If you would invest 1,564 in Magyar Telekom Plc on November 30, 2024 and sell it today you would earn a total of 512.00 from holding Magyar Telekom Plc or generate 32.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 91.53% |
Values | Daily Returns |
Magyar Telekom Plc vs. Nippon Telegraph Telephone
Performance |
Timeline |
Magyar Telekom Plc |
Nippon Telegraph Tel |
Magyar Telekom and Nippon Telegraph Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Magyar Telekom and Nippon Telegraph
The main advantage of trading using opposite Magyar Telekom and Nippon Telegraph positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magyar Telekom position performs unexpectedly, Nippon Telegraph 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 Nippon Telegraph will offset losses from the drop in Nippon Telegraph's long position.Magyar Telekom vs. SwissCom AG | Magyar Telekom vs. Hellenic Telecommunications Org | Magyar Telekom vs. Telefonica SA ADR | Magyar Telekom vs. Lumen Technologies |
Nippon Telegraph vs. Magyar Telekom Plc | Nippon Telegraph vs. Singapore Telecommunications PK | Nippon Telegraph vs. Hellenic Telecommunications Org | Nippon Telegraph vs. KDDI Corp PK |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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