Correlation Between Nippon Telegraph and Grupo Televisa

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

By analyzing existing cross correlation between Nippon Telegraph Telephone and Grupo Televisa SAB, you can compare the effects of market volatilities on Nippon Telegraph and Grupo Televisa 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 Nippon Telegraph with a short position of Grupo Televisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Telegraph and Grupo Televisa.

Diversification Opportunities for Nippon Telegraph and Grupo Televisa

-0.63

Correlation Coefficient

Nippon Telegraph  Grupo Televisa

Excellent diversification

The 3 months correlation between Nippon and Grupo is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Telegraph Telephone and Grupo Televisa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Televisa SAB and Nippon Telegraph 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 Nippon Telegraph Telephone are associated (or correlated) with Grupo Televisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Televisa SAB has no effect on the direction of Nippon Telegraph i.e., Nippon Telegraph and Grupo Televisa go up and down completely randomly.

Pair Corralation between Nippon Telegraph and Grupo Televisa

Assuming the 90 days horizon Nippon Telegraph Telephone is expected to under-perform the Grupo Televisa. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nippon Telegraph Telephone is 1.14 times less risky than Grupo Televisa. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Grupo Televisa SAB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  60.00  in Grupo Televisa SAB on February 3, 2024 and sell it today you would earn a total of  0.00  from holding Grupo Televisa SAB or generate 0.0% return on investment over 90 days.

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

Nippon Telegraph Telephone  vs.  Grupo Televisa SAB

Nippon Telegraph Tel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Telegraph Telephone has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Grupo Televisa SAB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Televisa SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Grupo Televisa is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nippon Telegraph and Grupo Televisa

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

The idea behind Nippon Telegraph Telephone and Grupo Televisa SAB 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.