Correlation Between Truecaller and Millicom International

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

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

Diversification Opportunities for Truecaller and Millicom International

0.6

Correlation Coefficient

Truecaller  Millicom International

Poor diversification

The 3 months correlation between Truecaller and Millicom is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Truecaller AB and Millicom International Cellula in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millicom International and Truecaller 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 Truecaller AB are associated (or correlated) with Millicom International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millicom International has no effect on the direction of Truecaller i.e., Truecaller and Millicom International go up and down completely randomly.

Pair Corralation between Truecaller and Millicom International

Assuming the 90 days trading horizon Truecaller AB is expected to generate 1.95 times more return on investment than Millicom International. However, Truecaller is 1.95 times more volatile than Millicom International Cellular. It trades about 0.23 of its potential returns per unit of risk. Millicom International Cellular is currently generating about 0.03 per unit of risk. If you would invest  3,460  in Truecaller AB on September 5, 2024 and sell it today you would earn a total of  1,740  from holding Truecaller AB or generate 50.29% return on investment over 90 days.

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

Truecaller AB  vs.  Millicom International Cellula

Truecaller AB

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Truecaller AB are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Truecaller sustained solid returns over the last few months and may actually be approaching a breakup point.

Millicom International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Millicom International Cellular are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Millicom International is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Truecaller and Millicom International

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

The idea behind Truecaller AB and Millicom International Cellular 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.