Correlation Between Shenandoah Telecommunicatio and Vodacom Group

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

Diversification Opportunities for Shenandoah Telecommunicatio and Vodacom Group

0.68

Correlation Coefficient

Shenandoah Telecommunicatio  Vodacom Group

Poor diversification

The 3 months correlation between Shenandoah and Vodacom is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and Vodacom Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodacom Group 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 Vodacom Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodacom Group has no effect on the direction of Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and Vodacom Group go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and Vodacom Group

Given the investment horizon of 90 days Shenandoah Telecommunications Co is expected to under-perform the Vodacom Group. In addition to that, Shenandoah Telecommunicatio is 1.35 times more volatile than Vodacom Group Ltd. It trades about -0.02 of its total potential returns per unit of risk. Vodacom Group Ltd is currently generating about -0.01 per unit of volatility. If you would invest  651.00  in Vodacom Group Ltd on October 14, 2024 and sell it today you would lose (123.00) from holding Vodacom Group Ltd or give up 18.89% of portfolio value over 90 days.

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

Shenandoah Telecommunications   vs.  Vodacom Group Ltd

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 very healthy technical and fundamental indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Vodacom Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodacom Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shenandoah Telecommunicatio and Vodacom Group

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

The idea behind Shenandoah Telecommunications Co and Vodacom Group Ltd 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.