Correlation Between Telefonica Brasil and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil and Cogent Communications 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 Brasil and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonica Brasil SA and Cogent Communications Group, you can compare the effects of market volatilities on Telefonica Brasil and Cogent Communications 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 Brasil with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and Cogent Communications.
Diversification Opportunities for Telefonica Brasil and Cogent Communications
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonica and Cogent is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and Cogent Communications Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Telefonica Brasil 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 Brasil SA are associated (or correlated) with Cogent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Communications has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and Cogent Communications go up and down completely randomly.
Pair Corralation between Telefonica Brasil and Cogent Communications
Considering the 90-day investment horizon Telefonica Brasil SA is expected to under-perform the Cogent Communications. But the stock apears to be less risky and, when comparing its historical volatility, Telefonica Brasil SA is 1.01 times less risky than Cogent Communications. The stock trades about -0.17 of its potential returns per unit of risk. The Cogent Communications Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8,063 in Cogent Communications Group on August 28, 2024 and sell it today you would earn a total of 239.00 from holding Cogent Communications Group or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonica Brasil SA vs. Cogent Communications Group
Performance |
| Timeline |
| Telefonica Brasil |
| Cogent Communications |
Telefonica Brasil and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica Brasil and Cogent Communications
The main advantage of trading using opposite Telefonica Brasil and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil position performs unexpectedly, Cogent Communications 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 Cogent Communications will offset losses from the drop in Cogent Communications' long position.| Telefonica Brasil vs. Orange SA ADR | Telefonica Brasil vs. Vodafone Group PLC | Telefonica Brasil vs. Grupo Televisa SAB | Telefonica Brasil vs. America Movil SAB |
| Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. Charter Communications | Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. TIM Participacoes 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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