Correlation Between Shenandoah Telecommunicatio and AP Mller

Can any of the company-specific risk be diversified away by investing in both Shenandoah Telecommunicatio and AP Mller 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 Shenandoah Telecommunicatio and AP Mller into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenandoah Telecommunications and AP Mller , you can compare the effects of market volatilities on Shenandoah Telecommunicatio and AP Mller 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 Shenandoah Telecommunicatio with a short position of AP Mller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenandoah Telecommunicatio and AP Mller.

Diversification Opportunities for Shenandoah Telecommunicatio and AP Mller

-0.04

Correlation Coefficient

Shenandoah Telecommunicatio  AP Mller

Good diversification

The 3 months correlation between Shenandoah and DP4A is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Mller and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications are associated (or correlated) with AP Mller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Mller has no effect on the direction of Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and AP Mller go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and AP Mller

Assuming the 90 days horizon Shenandoah Telecommunications is expected to generate 0.8 times more return on investment than AP Mller. However, Shenandoah Telecommunications is 1.25 times less risky than AP Mller. It trades about -0.31 of its potential returns per unit of risk. AP Mller is currently generating about -0.36 per unit of risk. If you would invest  1,240  in Shenandoah Telecommunications on October 25, 2024 and sell it today you would lose (110.00) from holding Shenandoah Telecommunications or give up 8.87% of portfolio value over 90 days.

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

Shenandoah Telecommunications  vs.  AP Mller

Shenandoah Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenandoah Telecommunications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AP Mller

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Shenandoah Telecommunicatio and AP Mller

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

The idea behind Shenandoah Telecommunications and AP Mller 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.