Correlation Between Telefonica and Pegasus Tel
Can any of the company-specific risk be diversified away by investing in both Telefonica and Pegasus Tel 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 Telefonica and Pegasus Tel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonica SA ADR and Pegasus Tel, you can compare the effects of market volatilities on Telefonica and Pegasus Tel 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 Telefonica with a short position of Pegasus Tel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica and Pegasus Tel.
Diversification Opportunities for Telefonica and Pegasus Tel
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Telefonica and Pegasus is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica SA ADR and Pegasus Tel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasus Tel and Telefonica 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 Telefonica SA ADR are associated (or correlated) with Pegasus Tel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasus Tel has no effect on the direction of Telefonica i.e., Telefonica and Pegasus Tel go up and down completely randomly.
Pair Corralation between Telefonica and Pegasus Tel
Considering the 90-day investment horizon Telefonica SA ADR is expected to under-perform the Pegasus Tel. But the stock apears to be less risky and, when comparing its historical volatility, Telefonica SA ADR is 5.51 times less risky than Pegasus Tel. The stock trades about -0.11 of its potential returns per unit of risk. The Pegasus Tel is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 0.14 in Pegasus Tel on September 3, 2024 and sell it today you would lose (0.01) from holding Pegasus Tel or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonica SA ADR vs. Pegasus Tel
Performance |
| Timeline |
| Telefonica SA ADR |
| Pegasus Tel |
Telefonica and Pegasus Tel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica and Pegasus Tel
The main advantage of trading using opposite Telefonica and Pegasus Tel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica position performs unexpectedly, Pegasus Tel 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 Pegasus Tel will offset losses from the drop in Pegasus Tel's long position.| Telefonica vs. Highway Holdings Limited | Telefonica vs. QCR Holdings | Telefonica vs. Partner Communications | Telefonica vs. Acumen Pharmaceuticals |
| Pegasus Tel vs. BCE Inc | Pegasus Tel vs. Axiologix | Pegasus Tel vs. Advanced Info Service | Pegasus Tel vs. SwissCom AG |
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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