Correlation Between Dycasa SA and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both Dycasa 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 Dycasa 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 Dycasa SA and Telecom Argentina, you can compare the effects of market volatilities on Dycasa 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 Dycasa SA with a short position of Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dycasa SA and Telecom Argentina.
Diversification Opportunities for Dycasa SA and Telecom Argentina
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dycasa and Telecom is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dycasa SA and Telecom Argentina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina and Dycasa 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 Dycasa 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 Dycasa SA i.e., Dycasa SA and Telecom Argentina go up and down completely randomly.
Pair Corralation between Dycasa SA and Telecom Argentina
Assuming the 90 days trading horizon Dycasa SA is expected to generate 1.86 times more return on investment than Telecom Argentina. However, Dycasa SA is 1.86 times more volatile than Telecom Argentina. It trades about 0.24 of its potential returns per unit of risk. Telecom Argentina is currently generating about 0.24 per unit of risk. If you would invest 40,000 in Dycasa SA on August 31, 2024 and sell it today you would earn a total of 55,400 from holding Dycasa SA or generate 138.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dycasa SA vs. Telecom Argentina
Performance |
| Timeline |
| Dycasa SA |
| Telecom Argentina |
Dycasa SA and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dycasa SA and Telecom Argentina
The main advantage of trading using opposite Dycasa SA and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dycasa 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.| Dycasa SA vs. Telecom Argentina | Dycasa SA vs. United States Steel | Dycasa SA vs. Compania de Transporte | Dycasa SA vs. Transportadora de Gas |
| Telecom Argentina vs. Harmony Gold Mining | Telecom Argentina vs. Transportadora de Gas | Telecom Argentina vs. Agrometal SAI |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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