Correlation Between Vodafone Group and Hellenic Telecommunicatio

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

By analyzing existing cross correlation between Vodafone Group PLC and Hellenic Telecommunications Org, you can compare the effects of market volatilities on Vodafone Group and Hellenic Telecommunicatio 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 Vodafone Group with a short position of Hellenic Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and Hellenic Telecommunicatio.

Diversification Opportunities for Vodafone Group and Hellenic Telecommunicatio

0.82

Correlation Coefficient

Vodafone Group  Hellenic Telecommunicatio

Very poor diversification

The 3 months correlation between Vodafone and Hellenic is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and Hellenic Telecommunications Or in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hellenic Telecommunicatio and Vodafone Group 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 Vodafone Group PLC are associated (or correlated) with Hellenic Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hellenic Telecommunicatio has no effect on the direction of Vodafone Group i.e., Vodafone Group and Hellenic Telecommunicatio go up and down completely randomly.

Pair Corralation between Vodafone Group and Hellenic Telecommunicatio

Considering the 90-day investment horizon Vodafone Group PLC is expected to under-perform the Hellenic Telecommunicatio. But the stock apears to be less risky and, when comparing its historical volatility, Vodafone Group PLC is 1.93 times less risky than Hellenic Telecommunicatio. The stock trades about -0.23 of its potential returns per unit of risk. The Hellenic Telecommunications Org is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  784.00  in Hellenic Telecommunications Org on September 28, 2024 and sell it today you would earn a total of  21.00  from holding Hellenic Telecommunications Org or generate 2.68% return on investment over 90 days.

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

Vodafone Group PLC  vs.  Hellenic Telecommunications Or

Vodafone Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodafone Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hellenic Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hellenic Telecommunications Org has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Hellenic Telecommunicatio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vodafone Group and Hellenic Telecommunicatio

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

The idea behind Vodafone Group PLC and Hellenic Telecommunications Org 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 Transaction History module to view history of all your transactions and understand their impact on performance.