Correlation Between Goliath Film and Telefonica Brasil

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Can any of the company-specific risk be diversified away by investing in both Goliath Film and Telefonica Brasil 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 Goliath Film and Telefonica Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goliath Film and and Telefonica Brasil SA, you can compare the effects of market volatilities on Goliath Film and Telefonica Brasil 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 Goliath Film with a short position of Telefonica Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goliath Film and Telefonica Brasil.

Diversification Opportunities for Goliath Film and Telefonica Brasil

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Goliath and Telefonica is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Goliath Film and and Telefonica Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica Brasil and Goliath Film 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 Goliath Film and are associated (or correlated) with Telefonica Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica Brasil has no effect on the direction of Goliath Film i.e., Goliath Film and Telefonica Brasil go up and down completely randomly.

Pair Corralation between Goliath Film and Telefonica Brasil

Given the investment horizon of 90 days Goliath Film and is expected to generate 4.62 times more return on investment than Telefonica Brasil. However, Goliath Film is 4.62 times more volatile than Telefonica Brasil SA. It trades about 0.02 of its potential returns per unit of risk. Telefonica Brasil SA is currently generating about 0.04 per unit of risk. If you would invest  0.34  in Goliath Film and on September 4, 2024 and sell it today you would lose (0.14) from holding Goliath Film and or give up 41.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.6%
ValuesDaily Returns

Goliath Film and  vs.  Telefonica Brasil SA

 Performance 
       Timeline  
Goliath Film 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Goliath Film and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Telefonica Brasil 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Telefonica Brasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Goliath Film and Telefonica Brasil Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Goliath Film and Telefonica Brasil

The main advantage of trading using opposite Goliath Film and Telefonica Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goliath Film position performs unexpectedly, Telefonica Brasil 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 Brasil will offset losses from the drop in Telefonica Brasil's long position.
The idea behind Goliath Film and and Telefonica Brasil SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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