Correlation Between Telefonica Brasil and SwissCom
Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil and SwissCom 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 SwissCom 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 SwissCom AG, you can compare the effects of market volatilities on Telefonica Brasil and SwissCom 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 SwissCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and SwissCom.
Diversification Opportunities for Telefonica Brasil and SwissCom
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telefonica and SwissCom is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and SwissCom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SwissCom AG 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 SwissCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SwissCom AG has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and SwissCom go up and down completely randomly.
Pair Corralation between Telefonica Brasil and SwissCom
Considering the 90-day investment horizon Telefonica Brasil SA is expected to generate 1.1 times more return on investment than SwissCom. However, Telefonica Brasil is 1.1 times more volatile than SwissCom AG. It trades about -0.15 of its potential returns per unit of risk. SwissCom AG is currently generating about -0.41 per unit of risk. If you would invest 945.00 in Telefonica Brasil SA on August 29, 2024 and sell it today you would lose (55.00) from holding Telefonica Brasil SA or give up 5.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonica Brasil SA vs. SwissCom AG
Performance |
| Timeline |
| Telefonica Brasil |
| SwissCom AG |
Telefonica Brasil and SwissCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica Brasil and SwissCom
The main advantage of trading using opposite Telefonica Brasil and SwissCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil position performs unexpectedly, SwissCom 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 SwissCom will offset losses from the drop in SwissCom'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 |
| SwissCom vs. HUMANA INC | SwissCom vs. SCOR PK | SwissCom vs. Aquagold International | SwissCom vs. Barloworld Ltd ADR |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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