Correlation Between Deutsche Telekom and Freshpet

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Can any of the company-specific risk be diversified away by investing in both Deutsche Telekom and Freshpet 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 Freshpet 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 Freshpet, you can compare the effects of market volatilities on Deutsche Telekom and Freshpet 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 Freshpet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and Freshpet.

Diversification Opportunities for Deutsche Telekom and Freshpet

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Deutsche and Freshpet is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and Freshpet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freshpet 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 Freshpet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freshpet has no effect on the direction of Deutsche Telekom i.e., Deutsche Telekom and Freshpet go up and down completely randomly.

Pair Corralation between Deutsche Telekom and Freshpet

If you would invest  10,828  in Freshpet on December 29, 2023 and sell it today you would earn a total of  743.00  from holding Freshpet or generate 6.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy4.55%
ValuesDaily Returns

Deutsche Telekom AG  vs.  Freshpet

 Performance 
       Timeline  
Deutsche Telekom 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Deutsche Telekom AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Deutsche Telekom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Freshpet 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Freshpet are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Freshpet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Telekom and Freshpet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Deutsche Telekom and Freshpet

The main advantage of trading using opposite Deutsche Telekom and Freshpet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom position performs unexpectedly, Freshpet 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 Freshpet will offset losses from the drop in Freshpet's long position.
The idea behind Deutsche Telekom AG and Freshpet 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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