Correlation Between Telia Company and COMSovereign Holding

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

By analyzing existing cross correlation between Telia Company AB and COMSovereign Holding Corp, you can compare the effects of market volatilities on Telia Company and COMSovereign Holding 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 Telia Company with a short position of COMSovereign Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telia Company and COMSovereign Holding.

Diversification Opportunities for Telia Company and COMSovereign Holding

-0.49

Correlation Coefficient

Telia Company  COMSovereign Holding

Very good diversification

The 3 months correlation between Telia and COMSovereign is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company AB and COMSovereign Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMSovereign Holding Corp and Telia Company 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 Telia Company AB are associated (or correlated) with COMSovereign Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMSovereign Holding Corp has no effect on the direction of Telia Company i.e., Telia Company and COMSovereign Holding go up and down completely randomly.

Pair Corralation between Telia Company and COMSovereign Holding

Assuming the 90 days horizon Telia Company AB is expected to generate 0.76 times more return on investment than COMSovereign Holding. However, Telia Company AB is 1.32 times less risky than COMSovereign Holding. It trades about 0.03 of its potential returns per unit of risk. COMSovereign Holding Corp is currently generating about -0.01 per unit of risk. If you would invest  257.00  in Telia Company AB on October 5, 2024 and sell it today you would earn a total of  53.00  from holding Telia Company AB or generate 20.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	22.14%
Values	Daily Returns

Telia Company AB  vs.  COMSovereign Holding Corp

Telia Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telia Company AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Telia Company is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

COMSovereign Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMSovereign Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, COMSovereign Holding is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Telia Company and COMSovereign Holding

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

The idea behind Telia Company AB and COMSovereign Holding Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.