Correlation Between Agrometal SAI and Telecom Argentina

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

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

Diversification Opportunities for Agrometal SAI and Telecom Argentina

0.84

Correlation Coefficient

Agrometal SAI  Telecom Argentina

Very poor diversification

The 3 months correlation between Agrometal and Telecom is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Agrometal SAI and Telecom Argentina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina and Agrometal SAI 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 Agrometal SAI are associated (or correlated) with Telecom Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Argentina has no effect on the direction of Agrometal SAI i.e., Agrometal SAI and Telecom Argentina go up and down completely randomly.

Pair Corralation between Agrometal SAI and Telecom Argentina

Assuming the 90 days trading horizon Agrometal SAI is expected to generate 1.24 times less return on investment than Telecom Argentina. In addition to that, Agrometal SAI is 1.46 times more volatile than Telecom Argentina. It trades about 0.07 of its total potential returns per unit of risk. Telecom Argentina is currently generating about 0.13 per unit of volatility. If you would invest  22,425  in Telecom Argentina on February 5, 2024 and sell it today you would earn a total of  167,595  from holding Telecom Argentina or generate 747.36% return on investment over 90 days.

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

Agrometal SAI  vs.  Telecom Argentina

Agrometal SAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agrometal SAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Telecom Argentina

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Agrometal SAI and Telecom Argentina

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

The idea behind Agrometal SAI and Telecom Argentina 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.