Correlation Between Telefonica Brasil and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil 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 Telefonica Brasil and Telenor ASA 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 Telenor ASA ADR, you can compare the effects of market volatilities on Telefonica Brasil 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 Telefonica Brasil with a short position of Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and Telenor ASA.
Diversification Opportunities for Telefonica Brasil and Telenor ASA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Telefonica and Telenor is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil 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 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 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 Telefonica Brasil i.e., Telefonica Brasil and Telenor ASA go up and down completely randomly.
Pair Corralation between Telefonica Brasil and Telenor ASA
Considering the 90-day investment horizon Telefonica Brasil SA is expected to generate 2.01 times more return on investment than Telenor ASA. However, Telefonica Brasil is 2.01 times more volatile than Telenor ASA ADR. It trades about 0.4 of its potential returns per unit of risk. Telenor ASA ADR is currently generating about 0.53 per unit of risk. If you would invest 755.00 in Telefonica Brasil SA on November 1, 2024 and sell it today you would earn a total of 119.00 from holding Telefonica Brasil SA or generate 15.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonica Brasil SA vs. Telenor ASA ADR
Performance |
| Timeline |
| Telefonica Brasil |
| Telenor ASA ADR |
Telefonica Brasil and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica Brasil and Telenor ASA
The main advantage of trading using opposite Telefonica Brasil and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil 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.| Telefonica Brasil vs. Vodafone Group PLC | Telefonica Brasil vs. Grupo Televisa SAB | Telefonica Brasil vs. America Movil SAB | Telefonica Brasil vs. Telefonica SA ADR |
| Telenor ASA vs. PCCW Limited | Telenor ASA vs. Hellenic Telecommunications Org | Telenor ASA vs. Telefonica SA ADR | Telenor ASA vs. XL Axiata Tbk |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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