Correlation Between Deutsche Telekom and Telefonica

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

Diversification Opportunities for Deutsche Telekom and Telefonica

0.0

Correlation Coefficient

Deutsche Telekom  Telefonica

Pay attention - limited upside

The 3 months correlation between Deutsche and Telefonica is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and Telefonica SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica SA ADR 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 Telefonica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica SA ADR has no effect on the direction of Deutsche Telekom i.e., Deutsche Telekom and Telefonica go up and down completely randomly.

Pair Corralation between Deutsche Telekom and Telefonica

If you would invest  492.00  in Telefonica SA ADR on May 7, 2025 and sell it today you would earn a total of  38.00  from holding Telefonica SA ADR or generate 7.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Deutsche Telekom AG  vs.  Telefonica SA ADR

Deutsche Telekom

Risk-Adjusted Performance

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 fairly 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.

Telefonica SA ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telefonica SA ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Telefonica may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Deutsche Telekom and Telefonica

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

The idea behind Deutsche Telekom AG and Telefonica SA ADR 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.