Correlation Between Telefnica and Livetech
Can any of the company-specific risk be diversified away by investing in both Telefnica and Livetech 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 Telefnica and Livetech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefnica SA and Livetech da Bahia, you can compare the effects of market volatilities on Telefnica and Livetech 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 Telefnica with a short position of Livetech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefnica and Livetech.
Diversification Opportunities for Telefnica and Livetech
Modest diversification
The 3 months correlation between Telefnica and Livetech is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Telefnica SA and Livetech da Bahia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livetech da Bahia and Telefnica 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 Telefnica SA are associated (or correlated) with Livetech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livetech da Bahia has no effect on the direction of Telefnica i.e., Telefnica and Livetech go up and down completely randomly.
Pair Corralation between Telefnica and Livetech
Assuming the 90 days trading horizon Telefnica SA is expected to generate 1.12 times more return on investment than Livetech. However, Telefnica is 1.12 times more volatile than Livetech da Bahia. It trades about -0.04 of its potential returns per unit of risk. Livetech da Bahia is currently generating about -0.53 per unit of risk. If you would invest 2,691 in Telefnica SA on September 1, 2024 and sell it today you would lose (52.00) from holding Telefnica SA or give up 1.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Telefnica SA vs. Livetech da Bahia
Performance |
| Timeline |
| Telefnica SA |
| Livetech da Bahia |
Telefnica and Livetech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefnica and Livetech
The main advantage of trading using opposite Telefnica and Livetech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefnica position performs unexpectedly, Livetech 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 Livetech will offset losses from the drop in Livetech's long position.| Telefnica vs. Fidelity National Information | Telefnica vs. Zoom Video Communications | Telefnica vs. G2D Investments | Telefnica vs. Verizon Communications |
| Livetech vs. Lupatech SA | Livetech vs. Rossi Residencial SA | Livetech vs. Usinas Siderrgicas de | Livetech vs. Refinaria de Petrleos |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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