Correlation Between Telecomunicaes Brasileiras and British American
Can any of the company-specific risk be diversified away by investing in both Telecomunicaes Brasileiras and British American 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 Telecomunicaes Brasileiras and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecomunicaes Brasileiras SA and British American Tobacco, you can compare the effects of market volatilities on Telecomunicaes Brasileiras and British American 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 Telecomunicaes Brasileiras with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecomunicaes Brasileiras and British American.
Diversification Opportunities for Telecomunicaes Brasileiras and British American
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telecomunicaes and British is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Telecomunicaes Brasileiras SA and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and Telecomunicaes Brasileiras 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 Telecomunicaes Brasileiras SA are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Telecomunicaes Brasileiras i.e., Telecomunicaes Brasileiras and British American go up and down completely randomly.
Pair Corralation between Telecomunicaes Brasileiras and British American
Assuming the 90 days trading horizon Telecomunicaes Brasileiras SA is expected to generate 1.04 times more return on investment than British American. However, Telecomunicaes Brasileiras is 1.04 times more volatile than British American Tobacco. It trades about 0.16 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.04 per unit of risk. If you would invest 739.00 in Telecomunicaes Brasileiras SA on November 4, 2024 and sell it today you would earn a total of 90.00 from holding Telecomunicaes Brasileiras SA or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecomunicaes Brasileiras SA vs. British American Tobacco
Performance |
| Timeline |
| Telecomunicaes Brasileiras |
| British American Tobacco |
Telecomunicaes Brasileiras and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecomunicaes Brasileiras and British American
The main advantage of trading using opposite Telecomunicaes Brasileiras and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecomunicaes Brasileiras position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Telecomunicaes Brasileiras vs. Positivo Tecnologia SA | Telecomunicaes Brasileiras vs. Rossi Residencial SA | Telecomunicaes Brasileiras vs. Kepler Weber SA | Telecomunicaes Brasileiras vs. PDG Realty SA |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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