Correlation Between Tele2 AB and Consolidated Communications

Can any of the company-specific risk be diversified away by investing in both Tele2 AB and Consolidated Communications 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 Tele2 AB and Consolidated Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tele2 AB and Consolidated Communications, you can compare the effects of market volatilities on Tele2 AB and Consolidated Communications 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 Tele2 AB with a short position of Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tele2 AB and Consolidated Communications.

Diversification Opportunities for Tele2 AB and Consolidated Communications

0.0

Correlation Coefficient

Tele2 AB  Consolidated Communications

Pay attention - limited upside

The 3 months correlation between Tele2 and Consolidated is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tele2 AB and Consolidated Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications and Tele2 AB 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 Tele2 AB are associated (or correlated) with Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of Tele2 AB i.e., Tele2 AB and Consolidated Communications go up and down completely randomly.

Pair Corralation between Tele2 AB and Consolidated Communications

If you would invest  513.00  in Tele2 AB on November 19, 2024 and sell it today you would earn a total of  39.00  from holding Tele2 AB or generate 7.6% return on investment over 90 days.

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

Tele2 AB  vs.  Consolidated Communications

Tele2 AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tele2 AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Tele2 AB may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Consolidated Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Consolidated Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Consolidated Communications is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Tele2 AB and Consolidated Communications

The main advantage of trading using opposite Tele2 AB and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tele2 AB position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.

The idea behind Tele2 AB and Consolidated Communications 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..