Correlation Between Telefonica Brasil and KORE Group

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

Diversification Opportunities for Telefonica Brasil and KORE Group

0.52

Correlation Coefficient

Telefonica Brasil  KORE Group

Very weak diversification

The 3 months correlation between Telefonica and KORE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and KORE Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KORE Group Holdings 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 KORE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KORE Group Holdings has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and KORE Group go up and down completely randomly.

Pair Corralation between Telefonica Brasil and KORE Group

Considering the 90-day investment horizon Telefonica Brasil SA is expected to under-perform the KORE Group. But the stock apears to be less risky and, when comparing its historical volatility, Telefonica Brasil SA is 2.47 times less risky than KORE Group. The stock trades about -0.02 of its potential returns per unit of risk. The KORE Group Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  71.00  in KORE Group Holdings on February 4, 2024 and sell it today you would earn a total of  10.38  from holding KORE Group Holdings or generate 14.62% return on investment over 90 days.

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

Telefonica Brasil SA  vs.  KORE Group Holdings

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 fairly stable forward indicators, Telefonica Brasil is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

KORE Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KORE Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, KORE Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Telefonica Brasil and KORE Group

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

The idea behind Telefonica Brasil SA and KORE Group Holdings 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.