Correlation Between SoftBank Group and T Mobile

Can any of the company-specific risk be diversified away by investing in both SoftBank Group and T Mobile 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 SoftBank Group and T Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SoftBank Group Corp and T Mobile, you can compare the effects of market volatilities on SoftBank Group and T Mobile 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 SoftBank Group with a short position of T Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and T Mobile.

Diversification Opportunities for SoftBank Group and T Mobile

0.59

Correlation Coefficient

SoftBank Group  T Mobile

Very weak diversification

The 3 months correlation between SoftBank and TM5 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and SoftBank Group 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 SoftBank Group Corp are associated (or correlated) with T Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of SoftBank Group i.e., SoftBank Group and T Mobile go up and down completely randomly.

Pair Corralation between SoftBank Group and T Mobile

Assuming the 90 days horizon SoftBank Group Corp is expected to generate 1.06 times more return on investment than T Mobile. However, SoftBank Group is 1.06 times more volatile than T Mobile. It trades about -0.03 of its potential returns per unit of risk. T Mobile is currently generating about -0.18 per unit of risk. If you would invest  5,512  in SoftBank Group Corp on September 24, 2024 and sell it today you would lose (91.00) from holding SoftBank Group Corp or give up 1.65% of portfolio value over 90 days.

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

SoftBank Group Corp  vs.  T Mobile

SoftBank Group Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SoftBank Group Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SoftBank Group reported solid returns over the last few months and may actually be approaching a breakup point.

T Mobile

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, T Mobile reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SoftBank Group and T Mobile

The main advantage of trading using opposite SoftBank Group and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, T Mobile 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 T Mobile will offset losses from the drop in T Mobile's long position.

The idea behind SoftBank Group Corp and T Mobile 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.