Correlation Between Grab Holdings and Telefonica Brasil

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

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

Diversification Opportunities for Grab Holdings and Telefonica Brasil

-0.78

Correlation Coefficient

Grab Holdings  Telefonica Brasil

Pay attention - limited upside

The 3 months correlation between Grab and Telefonica is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Grab Holdings and Telefonica Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica Brasil and Grab Holdings 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 Grab Holdings are associated (or correlated) with Telefonica Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica Brasil has no effect on the direction of Grab Holdings i.e., Grab Holdings and Telefonica Brasil go up and down completely randomly.

Pair Corralation between Grab Holdings and Telefonica Brasil

Given the investment horizon of 90 days Grab Holdings is expected to generate 1.37 times more return on investment than Telefonica Brasil. However, Grab Holdings is 1.37 times more volatile than Telefonica Brasil SA. It trades about 0.11 of its potential returns per unit of risk. Telefonica Brasil SA is currently generating about -0.02 per unit of risk. If you would invest  353.00  in Grab Holdings on September 29, 2024 and sell it today you would earn a total of  128.00  from holding Grab Holdings or generate 36.26% return on investment over 90 days.

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

Grab Holdings  vs.  Telefonica Brasil SA

Grab Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grab Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Grab Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Telefonica Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telefonica Brasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Grab Holdings and Telefonica Brasil

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

The idea behind Grab Holdings and Telefonica Brasil 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.