Correlation Between Telemasters Holdings and MTN

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

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

Diversification Opportunities for Telemasters Holdings and MTN

0.2

Correlation Coefficient

Telemasters Holdings  MTN

Modest diversification

The 3 months correlation between Telemasters and MTN is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Telemasters Holdings and MTN Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN Group and Telemasters Holdings 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 Telemasters Holdings are associated (or correlated) with MTN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN Group has no effect on the direction of Telemasters Holdings i.e., Telemasters Holdings and MTN go up and down completely randomly.

Pair Corralation between Telemasters Holdings and MTN

Assuming the 90 days trading horizon Telemasters Holdings is expected to generate 1.68 times more return on investment than MTN. However, Telemasters Holdings is 1.68 times more volatile than MTN Group. It trades about 0.01 of its potential returns per unit of risk. MTN Group is currently generating about -0.06 per unit of risk. If you would invest  10,000  in Telemasters Holdings on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Telemasters Holdings or generate 0.0% return on investment over 90 days.

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

Telemasters Holdings  vs.  MTN Group

Telemasters Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telemasters Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Telemasters Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

MTN Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MTN Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MTN is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Telemasters Holdings and MTN

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

The idea behind Telemasters Holdings and MTN Group 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.