Correlation Between Telefonica Brasil and Telephone

Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil and Telephone 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 Telephone 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 Telephone and Data, you can compare the effects of market volatilities on Telefonica Brasil and Telephone 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 Telephone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and Telephone.

Diversification Opportunities for Telefonica Brasil and Telephone

0.12

Correlation Coefficient

Telefonica Brasil  Telephone

Average diversification

The 3 months correlation between Telefonica and Telephone is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and Telephone and Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telephone and Data 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 Telephone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telephone and Data has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and Telephone go up and down completely randomly.

Pair Corralation between Telefonica Brasil and Telephone

Considering the 90-day investment horizon Telefonica Brasil is expected to generate 3.56 times less return on investment than Telephone. But when comparing it to its historical volatility, Telefonica Brasil SA is 3.02 times less risky than Telephone. It trades about 0.02 of its potential returns per unit of risk. Telephone and Data is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,562  in Telephone and Data on January 31, 2024 and sell it today you would earn a total of  41.00  from holding Telephone and Data or generate 2.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Telefonica Brasil SA  vs.  Telephone and Data

Telefonica Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telefonica Brasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Telephone and Data

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telephone and Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Telefonica Brasil and Telephone

The main advantage of trading using opposite Telefonica Brasil and Telephone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil position performs unexpectedly, Telephone 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 Telephone will offset losses from the drop in Telephone's long position.

The idea behind Telefonica Brasil SA and Telephone and Data pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.