Correlation Between Telecom Argentina and Carlos Casado

Can any of the company-specific risk be diversified away by investing in both Telecom Argentina and Carlos Casado 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 Telecom Argentina and Carlos Casado into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Telecom Argentina and Carlos Casado, you can compare the effects of market volatilities on Telecom Argentina and Carlos Casado 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 Telecom Argentina with a short position of Carlos Casado. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and Carlos Casado.

Diversification Opportunities for Telecom Argentina and Carlos Casado

0.24

Correlation Coefficient

Telecom Argentina  Carlos Casado

Modest diversification

The 3 months correlation between Telecom and Carlos is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina and Carlos Casado in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlos Casado and Telecom Argentina 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 Telecom Argentina are associated (or correlated) with Carlos Casado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlos Casado has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Carlos Casado go up and down completely randomly.

Pair Corralation between Telecom Argentina and Carlos Casado

Assuming the 90 days trading horizon Telecom Argentina is expected to generate 1.29 times more return on investment than Carlos Casado. However, Telecom Argentina is 1.29 times more volatile than Carlos Casado. It trades about 0.13 of its potential returns per unit of risk. Carlos Casado is currently generating about 0.16 per unit of risk. If you would invest  30,655  in Telecom Argentina on September 2, 2024 and sell it today you would earn a total of  273,845  from holding Telecom Argentina or generate 893.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Telecom Argentina  vs.  Carlos Casado

Telecom Argentina

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Argentina are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Telecom Argentina sustained solid returns over the last few months and may actually be approaching a breakup point.

Carlos Casado

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlos Casado has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Carlos Casado is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Telecom Argentina and Carlos Casado

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

The idea behind Telecom Argentina and Carlos Casado 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.