Correlation Between Telecom Italia and Amedeo Air

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

Diversification Opportunities for Telecom Italia and Amedeo Air

0.3

Correlation Coefficient

Telecom Italia  Amedeo Air

Weak diversification

The 3 months correlation between Telecom and Amedeo is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and Amedeo Air Four in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amedeo Air Four 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 Amedeo Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amedeo Air Four has no effect on the direction of Telecom Italia i.e., Telecom Italia and Amedeo Air go up and down completely randomly.

Pair Corralation between Telecom Italia and Amedeo Air

Assuming the 90 days trading horizon Telecom Italia SpA is expected to generate 3.65 times more return on investment than Amedeo Air. However, Telecom Italia is 3.65 times more volatile than Amedeo Air Four. It trades about 0.13 of its potential returns per unit of risk. Amedeo Air Four is currently generating about 0.17 per unit of risk. If you would invest  39.00  in Telecom Italia SpA on April 24, 2025 and sell it today you would earn a total of  6.00  from holding Telecom Italia SpA or generate 15.38% return on investment over 90 days.

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

Telecom Italia SpA  vs.  Amedeo Air Four

Telecom Italia SpA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Italia SpA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Telecom Italia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Amedeo Air Four

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amedeo Air Four are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Amedeo Air is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Telecom Italia and Amedeo Air

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

The idea behind Telecom Italia SpA and Amedeo Air Four 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.