Correlation Between Pampa Energia and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both Pampa Energia 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 Pampa Energia and Telecom Argentina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pampa Energia SA and Telecom Argentina, you can compare the effects of market volatilities on Pampa Energia 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 Pampa Energia with a short position of Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pampa Energia and Telecom Argentina.
Diversification Opportunities for Pampa Energia and Telecom Argentina
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pampa and Telecom is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pampa Energia SA and Telecom Argentina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina and Pampa Energia 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 Pampa Energia 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 Pampa Energia i.e., Pampa Energia and Telecom Argentina go up and down completely randomly.
Pair Corralation between Pampa Energia and Telecom Argentina
Assuming the 90 days trading horizon Pampa Energia is expected to generate 1.03 times less return on investment than Telecom Argentina. But when comparing it to its historical volatility, Pampa Energia SA is 1.23 times less risky than Telecom Argentina. It trades about 0.16 of its potential returns per unit of risk. Telecom Argentina is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 30,300 in Telecom Argentina on August 24, 2024 and sell it today you would earn a total of 267,700 from holding Telecom Argentina or generate 883.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pampa Energia SA vs. Telecom Argentina
Performance |
| Timeline |
| Pampa Energia SA |
| Telecom Argentina |
Pampa Energia and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pampa Energia and Telecom Argentina
The main advantage of trading using opposite Pampa Energia and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pampa Energia 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.| Pampa Energia vs. Telecom Argentina | Pampa Energia vs. Transportadora de Gas | Pampa Energia vs. Harmony Gold Mining | Pampa Energia vs. United States Steel |
| Telecom Argentina vs. Transportadora de Gas | Telecom Argentina vs. Agrometal SAI | Telecom Argentina vs. Harmony Gold Mining | Telecom Argentina vs. United States Steel |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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