Correlation Between Telefonica Brasil and Telia Company
Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil and Telia Company 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 Telia Company 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 Telia Company AB, you can compare the effects of market volatilities on Telefonica Brasil and Telia Company 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 Telia Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and Telia Company.
Diversification Opportunities for Telefonica Brasil and Telia Company
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Telefonica and Telia is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company 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 Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and Telia Company go up and down completely randomly.
Pair Corralation between Telefonica Brasil and Telia Company
Considering the 90-day investment horizon Telefonica Brasil SA is expected to generate 0.9 times more return on investment than Telia Company. However, Telefonica Brasil SA is 1.11 times less risky than Telia Company. It trades about 0.01 of its potential returns per unit of risk. Telia Company AB is currently generating about -0.06 per unit of risk. If you would invest 955.00 in Telefonica Brasil SA on January 18, 2024 and sell it today you would lose (23.00) from holding Telefonica Brasil SA or give up 2.41% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 76.81% |
Values | Daily Returns |
Telefonica Brasil SA vs. Telia Company AB
Performance |
Timeline |
Telefonica Brasil |
Telia Company |
Telefonica Brasil and Telia Company Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Telefonica Brasil and Telia Company
The main advantage of trading using opposite Telefonica Brasil and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil position performs unexpectedly, Telia Company 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 Telia Company will offset losses from the drop in Telia Company's long position.Telefonica Brasil vs. Aquagold International | Telefonica Brasil vs. Thrivent High Yield | Telefonica Brasil vs. Morningstar Unconstrained Allocation | Telefonica Brasil vs. Via Renewables |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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