Correlation Between Telecom Italia and Bushveld Minerals

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

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

Diversification Opportunities for Telecom Italia and Bushveld Minerals

-0.23

Correlation Coefficient

Telecom Italia  Bushveld Minerals

Very good diversification

The 3 months correlation between Telecom and Bushveld is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and Bushveld Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bushveld Minerals and Telecom Italia 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 Telecom Italia SpA are associated (or correlated) with Bushveld Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bushveld Minerals has no effect on the direction of Telecom Italia i.e., Telecom Italia and Bushveld Minerals go up and down completely randomly.

Pair Corralation between Telecom Italia and Bushveld Minerals

If you would invest  3.50  in Bushveld Minerals Limited on February 12, 2024 and sell it today you would lose (2.00) from holding Bushveld Minerals Limited or give up 57.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Telecom Italia SpA  vs.  Bushveld Minerals Limited

Telecom Italia SpA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bushveld Minerals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bushveld Minerals Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bushveld Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telecom Italia and Bushveld Minerals

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

The idea behind Telecom Italia SpA and Bushveld Minerals Limited 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.