Correlation Between T MOBILE and DAIRY FARM

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

By analyzing existing cross correlation between T MOBILE US and DAIRY FARM INTL, you can compare the effects of market volatilities on T MOBILE and DAIRY FARM 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 T MOBILE with a short position of DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of T MOBILE and DAIRY FARM.

Diversification Opportunities for T MOBILE and DAIRY FARM

0.92

Correlation Coefficient

T MOBILE  DAIRY FARM

Almost no diversification

The 3 months correlation between TM5 and DAIRY is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL and T MOBILE 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 T MOBILE US are associated (or correlated) with DAIRY FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIRY FARM INTL has no effect on the direction of T MOBILE i.e., T MOBILE and DAIRY FARM go up and down completely randomly.

Pair Corralation between T MOBILE and DAIRY FARM

Assuming the 90 days trading horizon T MOBILE US is expected to generate 0.55 times more return on investment than DAIRY FARM. However, T MOBILE US is 1.81 times less risky than DAIRY FARM. It trades about 0.09 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about -0.01 per unit of risk. If you would invest  13,019  in T MOBILE US on September 29, 2024 and sell it today you would earn a total of  8,271  from holding T MOBILE US or generate 63.53% return on investment over 90 days.

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

T MOBILE US  vs.  DAIRY FARM INTL

T MOBILE US

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE US are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, T MOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

DAIRY FARM INTL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DAIRY FARM INTL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DAIRY FARM unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T MOBILE and DAIRY FARM

The main advantage of trading using opposite T MOBILE and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T MOBILE position performs unexpectedly, DAIRY FARM 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 DAIRY FARM will offset losses from the drop in DAIRY FARM's long position.

The idea behind T MOBILE US and DAIRY FARM INTL 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.