Correlation Between Pegasus Tel and Telefonica

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

By analyzing existing cross correlation between Pegasus Tel and Telefonica SA ADR, you can compare the effects of market volatilities on Pegasus Tel and Telefonica 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 Pegasus Tel with a short position of Telefonica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pegasus Tel and Telefonica.

Diversification Opportunities for Pegasus Tel and Telefonica

0.15

Correlation Coefficient

Pegasus Tel  Telefonica

Average diversification

The 3 months correlation between Pegasus and Telefonica is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Pegasus Tel and Telefonica SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica SA ADR and Pegasus Tel 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 Pegasus Tel are associated (or correlated) with Telefonica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica SA ADR has no effect on the direction of Pegasus Tel i.e., Pegasus Tel and Telefonica go up and down completely randomly.

Pair Corralation between Pegasus Tel and Telefonica

Given the investment horizon of 90 days Pegasus Tel is expected to generate 8.91 times more return on investment than Telefonica. However, Pegasus Tel is 8.91 times more volatile than Telefonica SA ADR. It trades about 0.1 of its potential returns per unit of risk. Telefonica SA ADR is currently generating about 0.09 per unit of risk. If you would invest  0.25  in Pegasus Tel on May 6, 2025 and sell it today you would earn a total of  0.10  from holding Pegasus Tel or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Pegasus Tel  vs.  Telefonica SA ADR

Pegasus Tel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pegasus Tel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Pegasus Tel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Telefonica SA ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Telefonica SA ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Telefonica may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Pegasus Tel and Telefonica

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

The idea behind Pegasus Tel and Telefonica SA ADR 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.