Correlation Between Telenor ASA and Hellenic Telecommunicatio

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

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

Diversification Opportunities for Telenor ASA and Hellenic Telecommunicatio

0.75

Correlation Coefficient

Telenor ASA  Hellenic Telecommunicatio

Poor diversification

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

Pair Corralation between Telenor ASA and Hellenic Telecommunicatio

Assuming the 90 days horizon Telenor ASA is expected to generate 1.16 times less return on investment than Hellenic Telecommunicatio. But when comparing it to its historical volatility, Telenor ASA is 1.04 times less risky than Hellenic Telecommunicatio. It trades about 0.03 of its potential returns per unit of risk. Hellenic Telecommunications Org is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  668.00  in Hellenic Telecommunications Org on October 2, 2024 and sell it today you would earn a total of  72.00  from holding Hellenic Telecommunications Org or generate 10.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	81.58%
Values	Daily Returns

Telenor ASA  vs.  Hellenic Telecommunications Or

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 unfluctuating 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.

Hellenic Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Telenor ASA and Hellenic Telecommunicatio

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

The idea behind Telenor ASA and Hellenic Telecommunications Org 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.