Correlation Between Telia Company and TPG Telecom

Can any of the company-specific risk be diversified away by investing in both Telia Company and TPG Telecom 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 TPG Telecom 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 TPG Telecom Limited, you can compare the effects of market volatilities on Telia Company and TPG Telecom 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 TPG Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telia Company and TPG Telecom.

Diversification Opportunities for Telia Company and TPG Telecom

0.0

Correlation Coefficient

Telia Company  TPG Telecom

Pay attention - limited upside

The 3 months correlation between Telia and TPG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company AB and TPG Telecom Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Telecom Limited 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 TPG Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Telecom Limited has no effect on the direction of Telia Company i.e., Telia Company and TPG Telecom go up and down completely randomly.

Pair Corralation between Telia Company and TPG Telecom

If you would invest (100.00) in Telia Company AB on November 28, 2024 and sell it today you would earn a total of  100.00  from holding Telia Company AB or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Telia Company AB  vs.  TPG Telecom Limited

Telia Company

Risk-Adjusted Performance

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

TPG Telecom Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPG Telecom Limited 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 March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Telia Company and TPG Telecom

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

The idea behind Telia Company AB and TPG Telecom Limited 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.