Correlation Between T-MOBILE and Jenoptik

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

Diversification Opportunities for T-MOBILE and Jenoptik

0.17

Correlation Coefficient

T-MOBILE  Jenoptik

Average diversification

The 3 months correlation between T-MOBILE and Jenoptik is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and Jenoptik AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jenoptik AG 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 Jenoptik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jenoptik AG has no effect on the direction of T-MOBILE i.e., T-MOBILE and Jenoptik go up and down completely randomly.

Pair Corralation between T-MOBILE and Jenoptik

Assuming the 90 days trading horizon T MOBILE US is expected to generate 0.75 times more return on investment than Jenoptik. However, T MOBILE US is 1.34 times less risky than Jenoptik. It trades about 0.14 of its potential returns per unit of risk. Jenoptik AG is currently generating about -0.06 per unit of risk. If you would invest  21,246  in T MOBILE US on December 30, 2024 and sell it today you would earn a total of  3,664  from holding T MOBILE US or generate 17.25% return on investment over 90 days.

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

T MOBILE US  vs.  Jenoptik AG

T MOBILE US

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE US are ranked lower than 10 (%) 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.

Jenoptik AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jenoptik AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with T-MOBILE and Jenoptik

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

The idea behind T MOBILE US and Jenoptik AG 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.