Correlation Between Telecom Argentina and American Express

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

By analyzing existing cross correlation between Telecom Argentina and American Express Co, you can compare the effects of market volatilities on Telecom Argentina and American Express 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 American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and American Express.

Diversification Opportunities for Telecom Argentina and American Express

-0.43

Correlation Coefficient

Telecom Argentina  American Express

Very good diversification

The 3 months correlation between Telecom and American is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina and American Express Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express 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 American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and American Express go up and down completely randomly.

Pair Corralation between Telecom Argentina and American Express

Assuming the 90 days trading horizon Telecom Argentina is expected to generate 3.99 times less return on investment than American Express. In addition to that, Telecom Argentina is 1.11 times more volatile than American Express Co. It trades about 0.04 of its total potential returns per unit of risk. American Express Co is currently generating about 0.19 per unit of volatility. If you would invest  2,115,000  in American Express Co on April 29, 2025 and sell it today you would earn a total of  570,000  from holding American Express Co or generate 26.95% return on investment over 90 days.

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

Telecom Argentina  vs.  American Express Co

Telecom Argentina

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Argentina are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Telecom Argentina may actually be approaching a critical reversion point that can send shares even higher in August 2025.

American Express

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Express Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, American Express sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telecom Argentina and American Express

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

The idea behind Telecom Argentina and American Express Co 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.