Correlation Between SoftBank Group and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both SoftBank Group and Airtel Africa 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 Airtel Africa 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 Airtel Africa Plc, you can compare the effects of market volatilities on SoftBank Group and Airtel Africa 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 Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Airtel Africa.
Diversification Opportunities for SoftBank Group and Airtel Africa
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SoftBank and Airtel is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc 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 Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of SoftBank Group i.e., SoftBank Group and Airtel Africa go up and down completely randomly.
Pair Corralation between SoftBank Group and Airtel Africa
Assuming the 90 days horizon SoftBank Group is expected to generate 1.02 times less return on investment than Airtel Africa. But when comparing it to its historical volatility, SoftBank Group Corp is 1.59 times less risky than Airtel Africa. It trades about 0.03 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 132.00 in Airtel Africa Plc on October 11, 2024 and sell it today you would earn a total of 5.00 from holding Airtel Africa Plc or generate 3.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SoftBank Group Corp vs. Airtel Africa Plc
Performance |
Timeline |
SoftBank Group Corp |
Airtel Africa Plc |
SoftBank Group and Airtel Africa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SoftBank Group and Airtel Africa
The main advantage of trading using opposite SoftBank Group and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, Airtel Africa 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 Airtel Africa will offset losses from the drop in Airtel Africa's long position.SoftBank Group vs. Airtel Africa Plc | SoftBank Group vs. Vodafone Group PLC | SoftBank Group vs. United States Cellular | SoftBank Group vs. Telefonica SA ADR |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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