Correlation Between Telecom Argentina and Banco Hipotecario
Can any of the company-specific risk be diversified away by investing in both Telecom Argentina and Banco Hipotecario 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 Telecom Argentina and Banco Hipotecario into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Argentina and Banco Hipotecario SA, you can compare the effects of market volatilities on Telecom Argentina and Banco Hipotecario 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 Telecom Argentina with a short position of Banco Hipotecario. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and Banco Hipotecario.
Diversification Opportunities for Telecom Argentina and Banco Hipotecario
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Telecom and Banco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina and Banco Hipotecario SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Hipotecario and Telecom Argentina 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 Telecom Argentina are associated (or correlated) with Banco Hipotecario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Hipotecario has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Banco Hipotecario go up and down completely randomly.
Pair Corralation between Telecom Argentina and Banco Hipotecario
Assuming the 90 days trading horizon Telecom Argentina is expected to generate 0.94 times more return on investment than Banco Hipotecario. However, Telecom Argentina is 1.06 times less risky than Banco Hipotecario. It trades about -0.05 of its potential returns per unit of risk. Banco Hipotecario SA is currently generating about -0.12 per unit of risk. If you would invest 317,000 in Telecom Argentina on November 2, 2024 and sell it today you would lose (13,500) from holding Telecom Argentina or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Telecom Argentina vs. Banco Hipotecario SA
Performance |
| Timeline |
| Telecom Argentina |
| Banco Hipotecario |
Telecom Argentina and Banco Hipotecario Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Argentina and Banco Hipotecario
The main advantage of trading using opposite Telecom Argentina and Banco Hipotecario positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Argentina position performs unexpectedly, Banco Hipotecario 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 Banco Hipotecario will offset losses from the drop in Banco Hipotecario's long position.| Telecom Argentina vs. Harmony Gold Mining | Telecom Argentina vs. Compania de Transporte | Telecom Argentina vs. United States Steel | Telecom Argentina vs. Agrometal SAI |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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