Correlation Between Digerati Technologies and Telefonica
Can any of the company-specific risk be diversified away by investing in both Digerati Technologies 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 Digerati Technologies and Telefonica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digerati Technologies and Telefonica SA ADR, you can compare the effects of market volatilities on Digerati Technologies 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 Digerati Technologies with a short position of Telefonica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digerati Technologies and Telefonica.
Diversification Opportunities for Digerati Technologies and Telefonica
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Digerati and Telefonica is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Digerati Technologies 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 Digerati Technologies 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 Digerati Technologies 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 Digerati Technologies i.e., Digerati Technologies and Telefonica go up and down completely randomly.
Pair Corralation between Digerati Technologies and Telefonica
Given the investment horizon of 90 days Digerati Technologies is expected to generate 10.42 times more return on investment than Telefonica. However, Digerati Technologies is 10.42 times more volatile than Telefonica SA ADR. It trades about 0.33 of its potential returns per unit of risk. Telefonica SA ADR is currently generating about -0.14 per unit of risk. If you would invest 0.89 in Digerati Technologies on September 4, 2024 and sell it today you would earn a total of 1.10 from holding Digerati Technologies or generate 123.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digerati Technologies vs. Telefonica SA ADR
Performance |
| Timeline |
| Digerati Technologies |
| Telefonica SA ADR |
Digerati Technologies and Telefonica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digerati Technologies and Telefonica
The main advantage of trading using opposite Digerati Technologies and Telefonica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digerati Technologies 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.| Digerati Technologies vs. Telefonica Brasil SA | Digerati Technologies vs. Vodafone Group PLC | Digerati Technologies vs. Grupo Televisa SAB | Digerati Technologies vs. America Movil SAB |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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