Correlation Between T Mobile and Telenor ASA

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Can any of the company-specific risk be diversified away by investing in both T Mobile and Telenor ASA 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 Telenor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Mobile and Telenor ASA ADR, you can compare the effects of market volatilities on T Mobile and Telenor ASA 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 Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Mobile and Telenor ASA.

Diversification Opportunities for T Mobile and Telenor ASA

-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between TMUS and Telenor is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Telenor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA ADR 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 are associated (or correlated) with Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA ADR has no effect on the direction of T Mobile i.e., T Mobile and Telenor ASA go up and down completely randomly.

Pair Corralation between T Mobile and Telenor ASA

Given the investment horizon of 90 days T Mobile is expected to under-perform the Telenor ASA. In addition to that, T Mobile is 1.34 times more volatile than Telenor ASA ADR. It trades about -0.26 of its total potential returns per unit of risk. Telenor ASA ADR is currently generating about -0.26 per unit of volatility. If you would invest  1,180  in Telenor ASA ADR on September 28, 2024 and sell it today you would lose (81.00) from holding Telenor ASA ADR or give up 6.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

T Mobile  vs.  Telenor ASA ADR

 Performance 
       Timeline  
T Mobile 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, T Mobile may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Telenor ASA ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Telenor ASA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

T Mobile and Telenor ASA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with T Mobile and Telenor ASA

The main advantage of trading using opposite T Mobile and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Mobile position performs unexpectedly, Telenor ASA 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.
The idea behind T Mobile and Telenor ASA ADR 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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