Correlation Between Cellnex Telecom and Vantage Towers

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

By analyzing existing cross correlation between Cellnex Telecom SA and Vantage Towers AG, you can compare the effects of market volatilities on Cellnex Telecom and Vantage Towers 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 Cellnex Telecom with a short position of Vantage Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellnex Telecom and Vantage Towers.

Diversification Opportunities for Cellnex Telecom and Vantage Towers

-0.25

Correlation Coefficient

Cellnex Telecom  Vantage Towers

Very good diversification

The 3 months correlation between Cellnex and Vantage is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and Vantage Towers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vantage Towers AG and Cellnex Telecom 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 Cellnex Telecom SA are associated (or correlated) with Vantage Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vantage Towers AG has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and Vantage Towers go up and down completely randomly.

Pair Corralation between Cellnex Telecom and Vantage Towers

Assuming the 90 days horizon Cellnex Telecom SA is expected to under-perform the Vantage Towers. In addition to that, Cellnex Telecom is 3.37 times more volatile than Vantage Towers AG. It trades about -0.12 of its total potential returns per unit of risk. Vantage Towers AG is currently generating about 0.13 per unit of volatility. If you would invest  3,857  in Vantage Towers AG on September 12, 2024 and sell it today you would earn a total of  149.00  from holding Vantage Towers AG or generate 3.86% return on investment over 90 days.

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

Cellnex Telecom SA  vs.  Vantage Towers AG

Cellnex Telecom SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cellnex Telecom SA 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Vantage Towers AG

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vantage Towers AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vantage Towers is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cellnex Telecom and Vantage Towers

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

The idea behind Cellnex Telecom SA and Vantage Towers AG 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.