Correlation Between Telecom Argentina and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both Telecom Argentina and Telenor ASA 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 Telenor ASA 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 Telenor ASA ADR, you can compare the effects of market volatilities on Telecom Argentina and Telenor ASA 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 Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and Telenor ASA.
Diversification Opportunities for Telecom Argentina and Telenor ASA
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telecom and Telenor is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina SA and Telenor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA 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 Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA ADR has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Telenor ASA go up and down completely randomly.
Pair Corralation between Telecom Argentina and Telenor ASA
Considering the 90-day investment horizon Telecom Argentina SA is expected to generate 2.85 times more return on investment than Telenor ASA. However, Telecom Argentina is 2.85 times more volatile than Telenor ASA ADR. It trades about 0.07 of its potential returns per unit of risk. Telenor ASA ADR is currently generating about 0.06 per unit of risk. If you would invest 442.00 in Telecom Argentina SA on December 16, 2024 and sell it today you would earn a total of 672.00 from holding Telecom Argentina SA or generate 152.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Telecom Argentina SA vs. Telenor ASA ADR
Performance |
| Timeline |
| Telecom Argentina |
| Telenor ASA ADR |
Telecom Argentina and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Argentina and Telenor ASA
The main advantage of trading using opposite Telecom Argentina and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Argentina position performs unexpectedly, Telenor ASA 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.| Telecom Argentina vs. Telefonica SA ADR | ||
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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