Correlation Between Magyar Telekom and Pegasus Tel

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

Diversification Opportunities for Magyar Telekom and Pegasus Tel

-0.18

Correlation Coefficient

Magyar Telekom  Pegasus Tel

Good diversification

The 3 months correlation between Magyar and Pegasus is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Telekom Plc and Pegasus Tel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasus 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 Pegasus Tel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasus Tel has no effect on the direction of Magyar Telekom i.e., Magyar Telekom and Pegasus Tel go up and down completely randomly.

Pair Corralation between Magyar Telekom and Pegasus Tel

Assuming the 90 days horizon Magyar Telekom is expected to generate 6.72 times less return on investment than Pegasus Tel. But when comparing it to its historical volatility, Magyar Telekom Plc is 7.32 times less risky than Pegasus Tel. It trades about 0.1 of its potential returns per unit of risk. Pegasus Tel is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.05  in Pegasus Tel on October 2, 2024 and sell it today you would earn a total of  0.09  from holding Pegasus Tel or generate 180.0% 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.  Pegasus Tel

Magyar Telekom Plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magyar Telekom Plc are ranked lower than 8 (%) 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.

Pegasus Tel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pegasus Tel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, Pegasus Tel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magyar Telekom and Pegasus Tel

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

The idea behind Magyar Telekom Plc and Pegasus Tel 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.