Correlation Between Telecom Argentina and Celulosa Argentina
Can any of the company-specific risk be diversified away by investing in both Telecom Argentina and Celulosa 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 Telecom Argentina and Celulosa Argentina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Argentina and Celulosa Argentina SA, you can compare the effects of market volatilities on Telecom Argentina and Celulosa 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 Telecom Argentina with a short position of Celulosa Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and Celulosa Argentina.
Diversification Opportunities for Telecom Argentina and Celulosa Argentina
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Telecom and Celulosa is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina and Celulosa Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celulosa Argentina 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 Celulosa Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celulosa Argentina has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Celulosa Argentina go up and down completely randomly.
Pair Corralation between Telecom Argentina and Celulosa Argentina
Assuming the 90 days trading horizon Telecom Argentina is expected to generate 1.12 times more return on investment than Celulosa Argentina. However, Telecom Argentina is 1.12 times more volatile than Celulosa Argentina SA. It trades about -0.1 of its potential returns per unit of risk. Celulosa Argentina SA is currently generating about -0.16 per unit of risk. If you would invest 317,000 in Telecom Argentina on November 3, 2024 and sell it today you would lose (25,500) from holding Telecom Argentina or give up 8.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Argentina vs. Celulosa Argentina SA
Performance |
| Timeline |
| Telecom Argentina |
| Celulosa Argentina |
Telecom Argentina and Celulosa Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Argentina and Celulosa Argentina
The main advantage of trading using opposite Telecom Argentina and Celulosa Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Argentina position performs unexpectedly, Celulosa 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 Celulosa Argentina will offset losses from the drop in Celulosa Argentina's long position.| Telecom Argentina vs. Compania de Transporte | Telecom Argentina vs. Transportadora de Gas | Telecom Argentina vs. Agrometal SAI |
| Celulosa Argentina vs. Telecom Argentina | Celulosa Argentina vs. Transportadora de Gas | Celulosa Argentina vs. Compania de Transporte | Celulosa Argentina vs. Agrometal SAI |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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