Correlation Between Manufatura and Telefnica
Can any of the company-specific risk be diversified away by investing in both Manufatura and Telefnica 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 Manufatura and Telefnica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manufatura de Brinquedos and Telefnica SA, you can compare the effects of market volatilities on Manufatura and Telefnica 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 Manufatura with a short position of Telefnica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manufatura and Telefnica.
Diversification Opportunities for Manufatura and Telefnica
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Manufatura and Telefnica is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Manufatura de Brinquedos and Telefnica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefnica SA and Manufatura 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 Manufatura de Brinquedos are associated (or correlated) with Telefnica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefnica SA has no effect on the direction of Manufatura i.e., Manufatura and Telefnica go up and down completely randomly.
Pair Corralation between Manufatura and Telefnica
Assuming the 90 days trading horizon Manufatura de Brinquedos is expected to under-perform the Telefnica. In addition to that, Manufatura is 1.09 times more volatile than Telefnica SA. It trades about -0.19 of its total potential returns per unit of risk. Telefnica SA is currently generating about -0.09 per unit of volatility. If you would invest 2,516 in Telefnica SA on November 4, 2024 and sell it today you would lose (146.00) from holding Telefnica SA or give up 5.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manufatura de Brinquedos vs. Telefnica SA
Performance |
| Timeline |
| Manufatura de Brinquedos |
| Telefnica SA |
Manufatura and Telefnica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manufatura and Telefnica
The main advantage of trading using opposite Manufatura and Telefnica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manufatura position performs unexpectedly, Telefnica 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 Telefnica will offset losses from the drop in Telefnica's long position.| Manufatura vs. Inepar SA Indstria | Manufatura vs. Bombril SA | Manufatura vs. Hotis Othon SA | Manufatura vs. Hrcules SA |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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