Correlation Between Telefonica Brasil and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil and Deutsche Telekom 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 Deutsche Telekom 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 Deutsche Telekom AG, you can compare the effects of market volatilities on Telefonica Brasil and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and Deutsche Telekom.
Diversification Opportunities for Telefonica Brasil and Deutsche Telekom
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Telefonica and Deutsche is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and Deutsche Telekom go up and down completely randomly.
Pair Corralation between Telefonica Brasil and Deutsche Telekom
Considering the 90-day investment horizon Telefonica Brasil is expected to generate 1.03 times less return on investment than Deutsche Telekom. In addition to that, Telefonica Brasil is 1.42 times more volatile than Deutsche Telekom AG. It trades about 0.04 of its total potential returns per unit of risk. Deutsche Telekom AG is currently generating about 0.06 per unit of volatility. If you would invest 1,969 in Deutsche Telekom AG on August 27, 2024 and sell it today you would earn a total of 224.00 from holding Deutsche Telekom AG or generate 11.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 31.65% |
| Values | Daily Returns |
Telefonica Brasil SA vs. Deutsche Telekom AG
Performance |
| Timeline |
| Telefonica Brasil |
| Deutsche Telekom |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Telefonica Brasil and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica Brasil and Deutsche Telekom
The main advantage of trading using opposite Telefonica Brasil and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.| Telefonica Brasil vs. Liberty Broadband Srs | Telefonica Brasil vs. Ribbon Communications | Telefonica Brasil vs. Liberty Broadband Srs | Telefonica Brasil vs. Shenandoah Telecommunications Co |
| Deutsche Telekom vs. KDDI Corp PK | Deutsche Telekom vs. Nippon Telegraph Telephone | Deutsche Telekom vs. Softbank Group Corp | Deutsche Telekom vs. KT Corporation |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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