Correlation Between Telecom Argentina and Bolsas Y
Can any of the company-specific risk be diversified away by investing in both Telecom Argentina and Bolsas Y 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 Bolsas Y into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Argentina and Bolsas y Mercados, you can compare the effects of market volatilities on Telecom Argentina and Bolsas Y 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 Bolsas Y. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and Bolsas Y.
Diversification Opportunities for Telecom Argentina and Bolsas Y
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Telecom and Bolsas is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina and Bolsas y Mercados in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolsas y Mercados 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 Bolsas Y. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolsas y Mercados has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Bolsas Y go up and down completely randomly.
Pair Corralation between Telecom Argentina and Bolsas Y
Assuming the 90 days trading horizon Telecom Argentina is expected to generate 1.47 times more return on investment than Bolsas Y. However, Telecom Argentina is 1.47 times more volatile than Bolsas y Mercados. It trades about 0.25 of its potential returns per unit of risk. Bolsas y Mercados is currently generating about 0.09 per unit of risk. If you would invest 182,000 in Telecom Argentina on September 2, 2024 and sell it today you would earn a total of 122,500 from holding Telecom Argentina or generate 67.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Argentina vs. Bolsas y Mercados
Performance |
| Timeline |
| Telecom Argentina |
| Bolsas y Mercados |
Telecom Argentina and Bolsas Y Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Argentina and Bolsas Y
The main advantage of trading using opposite Telecom Argentina and Bolsas Y positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Argentina position performs unexpectedly, Bolsas Y 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 Bolsas Y will offset losses from the drop in Bolsas Y's long position.| Telecom Argentina vs. United States Steel | Telecom Argentina vs. Agrometal SAI | Telecom Argentina vs. Harmony Gold Mining | Telecom Argentina vs. Compania de Transporte |
| Bolsas Y vs. American Express Co | Bolsas Y vs. United States Steel | Bolsas Y vs. Pfizer Inc | Bolsas Y vs. Distribuidora de Gas |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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