Correlation Between Telecom Argentina and Carboclor
Can any of the company-specific risk be diversified away by investing in both Telecom Argentina and Carboclor 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 Carboclor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Argentina and Carboclor, you can compare the effects of market volatilities on Telecom Argentina and Carboclor 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 Carboclor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and Carboclor.
Diversification Opportunities for Telecom Argentina and Carboclor
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telecom and Carboclor is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina and Carboclor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carboclor 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 Carboclor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carboclor has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Carboclor go up and down completely randomly.
Pair Corralation between Telecom Argentina and Carboclor
Assuming the 90 days trading horizon Telecom Argentina is expected to generate 1.27 times more return on investment than Carboclor. However, Telecom Argentina is 1.27 times more volatile than Carboclor. It trades about 0.16 of its potential returns per unit of risk. Carboclor is currently generating about 0.02 per unit of risk. If you would invest 181,500 in Telecom Argentina on November 2, 2024 and sell it today you would earn a total of 122,000 from holding Telecom Argentina or generate 67.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Argentina vs. Carboclor
Performance |
| Timeline |
| Telecom Argentina |
| Carboclor |
Telecom Argentina and Carboclor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Argentina and Carboclor
The main advantage of trading using opposite Telecom Argentina and Carboclor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Argentina position performs unexpectedly, Carboclor 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 Carboclor will offset losses from the drop in Carboclor'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 |
| Carboclor vs. Agrometal SAI | Carboclor vs. Transportadora de Gas | Carboclor vs. Harmony Gold Mining | Carboclor 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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