Correlation Between MTN Group and U S Cellular

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

By analyzing existing cross correlation between MTN Group Ltd and United States Cellular, you can compare the effects of market volatilities on MTN Group and U S Cellular 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 MTN Group with a short position of U S Cellular. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTN Group and U S Cellular.

Diversification Opportunities for MTN Group and U S Cellular

-0.71

Correlation Coefficient

MTN Group  U S Cellular

Pay attention - limited upside

The 3 months correlation between MTN and USM is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding MTN Group Ltd and United States Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Cellular and MTN 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 MTN Group Ltd are associated (or correlated) with U S Cellular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Cellular has no effect on the direction of MTN Group i.e., MTN Group and U S Cellular go up and down completely randomly.

Pair Corralation between MTN Group and U S Cellular

Assuming the 90 days horizon MTN Group Ltd is expected to under-perform the U S Cellular. But the pink sheet apears to be less risky and, when comparing its historical volatility, MTN Group Ltd is 2.22 times less risky than U S Cellular. The pink sheet trades about -0.02 of its potential returns per unit of risk. The United States Cellular is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,011  in United States Cellular on September 5, 2024 and sell it today you would earn a total of  4,320  from holding United States Cellular or generate 214.82% return on investment over 90 days.

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

MTN Group Ltd  vs.  United States Cellular

MTN Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MTN Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

United States Cellular

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United States Cellular are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, U S Cellular displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MTN Group and U S Cellular

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

The idea behind MTN Group Ltd and United States Cellular 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.