Correlation Between Telephone and Altice USA

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

By analyzing existing cross correlation between Telephone and Data and Altice USA, you can compare the effects of market volatilities on Telephone and Altice USA 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 Telephone with a short position of Altice USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telephone and Altice USA.

Diversification Opportunities for Telephone and Altice USA

0.75

Correlation Coefficient

Telephone  Altice USA

Poor diversification

The 3 months correlation between Telephone and Altice is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Telephone and Data and Altice USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altice USA and Telephone 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 Telephone and Data are associated (or correlated) with Altice USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altice USA has no effect on the direction of Telephone i.e., Telephone and Altice USA go up and down completely randomly.

Pair Corralation between Telephone and Altice USA

Assuming the 90 days trading horizon Telephone and Data is expected to generate 0.37 times more return on investment than Altice USA. However, Telephone and Data is 2.74 times less risky than Altice USA. It trades about -0.01 of its potential returns per unit of risk. Altice USA is currently generating about -0.05 per unit of risk. If you would invest  1,819  in Telephone and Data on December 11, 2024 and sell it today you would lose (26.00) from holding Telephone and Data or give up 1.43% of portfolio value over 90 days.

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

Telephone and Data  vs.  Altice USA

Telephone and Data

Risk-Adjusted Performance

Very Weak

Over the last 90 days Telephone and Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Telephone is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Altice USA

Risk-Adjusted Performance

Weak

Over the last 90 days Altice USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Telephone and Altice USA

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

The idea behind Telephone and Data and Altice USA 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.