Correlation Between Gladstone Investment and Telecom Argentina

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

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

Diversification Opportunities for Gladstone Investment and Telecom Argentina

0.38

Correlation Coefficient

Gladstone Investment  Telecom Argentina

Weak diversification

The 3 months correlation between Gladstone and Telecom is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Telecom Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina and Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment i.e., Gladstone Investment and Telecom Argentina go up and down completely randomly.

Pair Corralation between Gladstone Investment and Telecom Argentina

Assuming the 90 days horizon Gladstone Investment is expected to under-perform the Telecom Argentina. But the stock apears to be less risky and, when comparing its historical volatility, Gladstone Investment is 2.56 times less risky than Telecom Argentina. The stock trades about -0.06 of its potential returns per unit of risk. The Telecom Argentina SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,320  in Telecom Argentina SA on October 11, 2024 and sell it today you would earn a total of  80.00  from holding Telecom Argentina SA or generate 6.06% return on investment over 90 days.

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

Gladstone Investment  vs.  Telecom Argentina SA

Gladstone Investment

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gladstone Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Telecom Argentina

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Argentina SA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Telecom Argentina reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gladstone Investment and Telecom Argentina

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

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.