Correlation Between Central Puerto and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both Central Puerto and Telecom Argentina 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 Central Puerto and Telecom Argentina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Puerto SA and Telecom Argentina, you can compare the effects of market volatilities on Central Puerto and Telecom Argentina 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 Central Puerto with a short position of Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Puerto and Telecom Argentina.
Diversification Opportunities for Central Puerto and Telecom Argentina
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Central and Telecom is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Central Puerto SA and Telecom Argentina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina and Central Puerto 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 Central Puerto SA are associated (or correlated) with Telecom Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Argentina has no effect on the direction of Central Puerto i.e., Central Puerto and Telecom Argentina go up and down completely randomly.
Pair Corralation between Central Puerto and Telecom Argentina
Assuming the 90 days trading horizon Central Puerto SA is expected to under-perform the Telecom Argentina. But the stock apears to be less risky and, when comparing its historical volatility, Central Puerto SA is 1.11 times less risky than Telecom Argentina. The stock trades about -0.03 of its potential returns per unit of risk. The Telecom Argentina is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 276,000 in Telecom Argentina on October 20, 2024 and sell it today you would earn a total of 13,000 from holding Telecom Argentina or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Puerto SA vs. Telecom Argentina
Performance |
| Timeline |
| Central Puerto SA |
| Telecom Argentina |
Central Puerto and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Puerto and Telecom Argentina
The main advantage of trading using opposite Central Puerto and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Puerto position performs unexpectedly, Telecom Argentina 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 Telecom Argentina will offset losses from the drop in Telecom Argentina's long position.| Central Puerto vs. Enel Generacion Costanera | Central Puerto vs. Edesa Holding SA | Central Puerto vs. Empresa Distribuidora Electrica |
| Telecom Argentina vs. Agrometal SAI | Telecom Argentina vs. Transportadora de Gas | Telecom Argentina vs. Harmony Gold Mining | Telecom Argentina vs. United States Steel |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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