Correlation Between Telecom Argentina and Telefonica
Can any of the company-specific risk be diversified away by investing in both Telecom Argentina and Telefonica 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 Telefonica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Argentina SA and Telefonica SA ADR, you can compare the effects of market volatilities on Telecom Argentina and Telefonica 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 Telefonica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and Telefonica.
Diversification Opportunities for Telecom Argentina and Telefonica
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telecom and Telefonica is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina SA and Telefonica SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica SA ADR 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 SA are associated (or correlated) with Telefonica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica SA ADR has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Telefonica go up and down completely randomly.
Pair Corralation between Telecom Argentina and Telefonica
Considering the 90-day investment horizon Telecom Argentina SA is expected to generate 4.95 times more return on investment than Telefonica. However, Telecom Argentina is 4.95 times more volatile than Telefonica SA ADR. It trades about 0.02 of its potential returns per unit of risk. Telefonica SA ADR is currently generating about -0.08 per unit of risk. If you would invest 1,206 in Telecom Argentina SA on October 24, 2024 and sell it today you would earn a total of 1.00 from holding Telecom Argentina SA or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Argentina SA vs. Telefonica SA ADR
Performance |
| Timeline |
| Telecom Argentina |
| Telefonica SA ADR |
Telecom Argentina and Telefonica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Argentina and Telefonica
The main advantage of trading using opposite Telecom Argentina and Telefonica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Argentina position performs unexpectedly, Telefonica 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 Telefonica will offset losses from the drop in Telefonica's long position.| Telecom Argentina vs. Telefonica SA ADR | Telecom Argentina vs. SK Telecom Co | Telecom Argentina vs. America Movil SAB | Telecom Argentina vs. KT Corporation |
| Telefonica vs. SK Telecom Co | Telefonica vs. America Movil SAB | Telefonica vs. KT Corporation | Telefonica vs. Telefonica Brasil SA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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