Correlation Between Telecom Argentina and Distribuidora
Can any of the company-specific risk be diversified away by investing in both Telecom Argentina and Distribuidora 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 Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Argentina and Distribuidora de Gas, you can compare the effects of market volatilities on Telecom Argentina and Distribuidora 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 Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and Distribuidora.
Diversification Opportunities for Telecom Argentina and Distribuidora
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Telecom and Distribuidora is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina and Distribuidora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribuidora de Gas 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 Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribuidora de Gas has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Distribuidora go up and down completely randomly.
Pair Corralation between Telecom Argentina and Distribuidora
Assuming the 90 days trading horizon Telecom Argentina is expected to generate 1.1 times less return on investment than Distribuidora. In addition to that, Telecom Argentina is 1.11 times more volatile than Distribuidora de Gas. It trades about 0.13 of its total potential returns per unit of risk. Distribuidora de Gas is currently generating about 0.16 per unit of volatility. If you would invest 14,000 in Distribuidora de Gas on August 30, 2024 and sell it today you would earn a total of 176,000 from holding Distribuidora de Gas or generate 1257.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Argentina vs. Distribuidora de Gas
Performance |
| Timeline |
| Telecom Argentina |
| Distribuidora de Gas |
Telecom Argentina and Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Argentina and Distribuidora
The main advantage of trading using opposite Telecom Argentina and Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Argentina position performs unexpectedly, Distribuidora 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 Distribuidora will offset losses from the drop in Distribuidora's long position.| Telecom Argentina vs. United States Steel | Telecom Argentina vs. Harmony Gold Mining | Telecom Argentina vs. Compania de Transporte | Telecom Argentina vs. Transportadora de Gas |
| Distribuidora vs. Harmony Gold Mining | Distribuidora vs. Compania de Transporte | Distribuidora 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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