Correlation Between Telefonica Brasil and Telecom Argentina

Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil 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 Telefonica Brasil and Telecom Argentina 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 Telecom Argentina SA, you can compare the effects of market volatilities on Telefonica Brasil 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 Telefonica Brasil with a short position of Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and Telecom Argentina.

Diversification Opportunities for Telefonica Brasil and Telecom Argentina

-0.76

Correlation Coefficient

Telefonica Brasil  Telecom Argentina

Pay attention - limited upside

The 3 months correlation between Telefonica and Telecom is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and Telecom Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina 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 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 Telefonica Brasil i.e., Telefonica Brasil and Telecom Argentina go up and down completely randomly.

Pair Corralation between Telefonica Brasil and Telecom Argentina

Considering the 90-day investment horizon Telefonica Brasil SA is expected to generate 0.58 times more return on investment than Telecom Argentina. However, Telefonica Brasil SA is 1.73 times less risky than Telecom Argentina. It trades about 0.19 of its potential returns per unit of risk. Telecom Argentina SA is currently generating about 0.0 per unit of risk. If you would invest  951.00  in Telefonica Brasil SA on May 3, 2025 and sell it today you would earn a total of  181.00  from holding Telefonica Brasil SA or generate 19.03% return on investment over 90 days.

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

Telefonica Brasil SA  vs.  Telecom Argentina SA

Telefonica Brasil

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telefonica Brasil SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, Telefonica Brasil showed solid returns over the last few months and may actually be approaching a breakup point.

Telecom Argentina

Risk-Adjusted Performance

Very Weak

Over the last 90 days Telecom Argentina SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Telecom Argentina is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Telefonica Brasil and Telecom Argentina

The main advantage of trading using opposite Telefonica Brasil and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil 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 Telefonica Brasil SA and Telecom Argentina SA 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.