Correlation Between Softbank Group and Deutsche Telekom

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

Diversification Opportunities for Softbank Group and Deutsche Telekom

0.0

Correlation Coefficient

Softbank Group  Deutsche Telekom

Pay attention - limited upside

The 3 months correlation between Softbank and Deutsche is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Softbank Group Corp and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of Softbank Group i.e., Softbank Group and Deutsche Telekom go up and down completely randomly.

Pair Corralation between Softbank Group and Deutsche Telekom

If you would invest (100.00) in Deutsche Telekom AG on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Deutsche Telekom AG or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Softbank Group Corp  vs.  Deutsche Telekom AG

Softbank Group Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Softbank Group Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Softbank Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Deutsche Telekom

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deutsche Telekom AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Deutsche Telekom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Softbank Group and Deutsche Telekom

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

The idea behind Softbank Group Corp and Deutsche Telekom AG 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.