Correlation Between Telecom Argentina and Pfizer

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

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

Diversification Opportunities for Telecom Argentina and Pfizer

-0.56

Correlation Coefficient

Telecom Argentina  Pfizer

Excellent diversification

The 3 months correlation between Telecom and Pfizer is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Pfizer go up and down completely randomly.

Pair Corralation between Telecom Argentina and Pfizer

Assuming the 90 days trading horizon Telecom Argentina is expected to generate 2.77 times less return on investment than Pfizer. In addition to that, Telecom Argentina is 1.26 times more volatile than Pfizer Inc. It trades about 0.04 of its total potential returns per unit of risk. Pfizer Inc is currently generating about 0.14 per unit of volatility. If you would invest  686,000  in Pfizer Inc on April 27, 2025 and sell it today you would earn a total of  113,000  from holding Pfizer Inc or generate 16.47% 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.  Pfizer Inc

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 strong fundamental drivers, Telecom Argentina is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pfizer Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Pfizer sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telecom Argentina and Pfizer

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

The idea behind Telecom Argentina and Pfizer Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.