Correlation Between Shenandoah Telecommunicatio and Telenor ASA

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

By analyzing existing cross correlation between Shenandoah Telecommunications Co and Telenor ASA, you can compare the effects of market volatilities on Shenandoah Telecommunicatio and Telenor ASA 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 Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenandoah Telecommunicatio and Telenor ASA.

Diversification Opportunities for Shenandoah Telecommunicatio and Telenor ASA

0.23

Correlation Coefficient

Shenandoah Telecommunicatio  Telenor ASA

Modest diversification

The 3 months correlation between Shenandoah and Telenor is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and Telenor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA 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 Co are associated (or correlated) with Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA has no effect on the direction of Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and Telenor ASA go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and Telenor ASA

Given the investment horizon of 90 days Shenandoah Telecommunications Co is expected to under-perform the Telenor ASA. But the stock apears to be less risky and, when comparing its historical volatility, Shenandoah Telecommunications Co is 1.5 times less risky than Telenor ASA. The stock trades about 0.0 of its potential returns per unit of risk. The Telenor ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  924.00  in Telenor ASA on September 25, 2024 and sell it today you would earn a total of  157.00  from holding Telenor ASA or generate 16.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	71.63%
Values	Daily Returns

Shenandoah Telecommunications   vs.  Telenor ASA

Shenandoah Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenandoah Telecommunications Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Telenor ASA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Shenandoah Telecommunicatio and Telenor ASA

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

The idea behind Shenandoah Telecommunications Co and Telenor ASA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.