Correlation Between Deutsche Telekom and ATT

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

By analyzing existing cross correlation between Deutsche Telekom AG and ATT Inc, you can compare the effects of market volatilities on Deutsche Telekom and ATT 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 Deutsche Telekom with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and ATT.

Diversification Opportunities for Deutsche Telekom and ATT

0.4

Correlation Coefficient

Deutsche Telekom  ATT

Very weak diversification

The 3 months correlation between Deutsche and ATT is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Deutsche Telekom 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 Deutsche Telekom AG are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Deutsche Telekom i.e., Deutsche Telekom and ATT go up and down completely randomly.

Pair Corralation between Deutsche Telekom and ATT

Assuming the 90 days horizon Deutsche Telekom AG is expected to generate 0.69 times more return on investment than ATT. However, Deutsche Telekom AG is 1.45 times less risky than ATT. It trades about 0.18 of its potential returns per unit of risk. ATT Inc is currently generating about 0.11 per unit of risk. If you would invest  2,141  in Deutsche Telekom AG on January 25, 2024 and sell it today you would earn a total of  263.00  from holding Deutsche Telekom AG or generate 12.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	64.23%
Values	Daily Returns

Deutsche Telekom AG  vs.  ATT Inc

Deutsche Telekom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Telekom AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

ATT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Deutsche Telekom and ATT

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

The idea behind Deutsche Telekom AG and ATT Inc 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.