Correlation Between Grupo Financiero and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both Grupo Financiero 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 Grupo Financiero and Telecom Argentina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Financiero Galicia and Telecom Argentina, you can compare the effects of market volatilities on Grupo Financiero 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 Grupo Financiero with a short position of Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and Telecom Argentina.
Diversification Opportunities for Grupo Financiero and Telecom Argentina
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grupo and Telecom is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Galicia and Telecom Argentina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina and Grupo Financiero 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 Grupo Financiero Galicia 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 Grupo Financiero i.e., Grupo Financiero and Telecom Argentina go up and down completely randomly.
Pair Corralation between Grupo Financiero and Telecom Argentina
Assuming the 90 days trading horizon Grupo Financiero Galicia is expected to generate 0.87 times more return on investment than Telecom Argentina. However, Grupo Financiero Galicia is 1.15 times less risky than Telecom Argentina. It trades about 0.2 of its potential returns per unit of risk. Telecom Argentina is currently generating about 0.13 per unit of risk. If you would invest 25,700 in Grupo Financiero Galicia on September 2, 2024 and sell it today you would earn a total of 603,300 from holding Grupo Financiero Galicia or generate 2347.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Financiero Galicia vs. Telecom Argentina
Performance |
| Timeline |
| Grupo Financiero Galicia |
| Telecom Argentina |
Grupo Financiero and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Financiero and Telecom Argentina
The main advantage of trading using opposite Grupo Financiero and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero 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.| Grupo Financiero vs. Harmony Gold Mining | Grupo Financiero vs. Compania de Transporte | Grupo Financiero vs. Agrometal SAI | Grupo Financiero vs. Telecom Argentina |
| Telecom Argentina vs. United States Steel | Telecom Argentina vs. Agrometal SAI | 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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