Correlation Between TPG Telecom and Proximus

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

By analyzing existing cross correlation between TPG Telecom Limited and Proximus NV ADR, you can compare the effects of market volatilities on TPG Telecom and Proximus 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 TPG Telecom with a short position of Proximus. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG Telecom and Proximus.

Diversification Opportunities for TPG Telecom and Proximus

-0.43

Correlation Coefficient

TPG Telecom  Proximus

Very good diversification

The 3 months correlation between TPG and Proximus is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding TPG Telecom Limited and Proximus NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proximus NV ADR and TPG Telecom 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 TPG Telecom Limited are associated (or correlated) with Proximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proximus NV ADR has no effect on the direction of TPG Telecom i.e., TPG Telecom and Proximus go up and down completely randomly.

Pair Corralation between TPG Telecom and Proximus

Assuming the 90 days horizon TPG Telecom Limited is expected to under-perform the Proximus. But the pink sheet apears to be less risky and, when comparing its historical volatility, TPG Telecom Limited is 1.45 times less risky than Proximus. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Proximus NV ADR is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  103.00  in Proximus NV ADR on December 29, 2024 and sell it today you would earn a total of  34.00  from holding Proximus NV ADR or generate 33.01% return on investment over 90 days.

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

TPG Telecom Limited  vs.  Proximus NV ADR

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 unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Proximus NV ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Proximus NV ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Proximus showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TPG Telecom and Proximus

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

The idea behind TPG Telecom Limited and Proximus NV 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.