Correlation Between Cresud SA and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both Cresud SA 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 Cresud SA and Telecom Argentina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cresud SA and Telecom Argentina, you can compare the effects of market volatilities on Cresud SA 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 Cresud SA with a short position of Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cresud SA and Telecom Argentina.
Diversification Opportunities for Cresud SA and Telecom Argentina
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cresud and Telecom is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cresud SA and Telecom Argentina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina and Cresud SA 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 Cresud 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 Cresud SA i.e., Cresud SA and Telecom Argentina go up and down completely randomly.
Pair Corralation between Cresud SA and Telecom Argentina
Assuming the 90 days trading horizon Cresud SA is expected to generate 2.64 times less return on investment than Telecom Argentina. But when comparing it to its historical volatility, Cresud SA is 1.42 times less risky than Telecom Argentina. It trades about 0.24 of its potential returns per unit of risk. Telecom Argentina is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 200,000 in Telecom Argentina on August 30, 2024 and sell it today you would earn a total of 94,000 from holding Telecom Argentina or generate 47.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cresud SA vs. Telecom Argentina
Performance |
| Timeline |
| Cresud SA |
| Telecom Argentina |
Cresud SA and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cresud SA and Telecom Argentina
The main advantage of trading using opposite Cresud SA and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cresud SA 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.| Cresud SA vs. Molinos Agro SA | Cresud SA vs. San Miguel AG | Cresud SA vs. Inversora Juramento SA | Cresud SA vs. Molinos Juan Semino |
| Telecom Argentina vs. Transportadora de Gas | Telecom Argentina vs. Harmony Gold Mining | Telecom Argentina vs. Compania de Transporte |
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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