Correlation Between IDT and Telecom Argentina

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

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

Diversification Opportunities for IDT and Telecom Argentina

0.02

Correlation Coefficient

IDT  Telecom Argentina

Significant diversification

The 3 months correlation between IDT and Telecom is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding IDT Corp. and Telecom Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina and IDT 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 IDT Corporation 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 IDT i.e., IDT and Telecom Argentina go up and down completely randomly.

Pair Corralation between IDT and Telecom Argentina

Considering the 90-day investment horizon IDT Corporation is expected to generate 0.52 times more return on investment than Telecom Argentina. However, IDT Corporation is 1.93 times less risky than Telecom Argentina. It trades about 0.05 of its potential returns per unit of risk. Telecom Argentina SA is currently generating about -0.04 per unit of risk. If you would invest  4,782  in IDT Corporation on December 19, 2024 and sell it today you would earn a total of  250.00  from holding IDT Corporation or generate 5.23% return on investment over 90 days.

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

IDT Corp.  vs.  Telecom Argentina SA

IDT Corporation

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IDT Corporation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental indicators, IDT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 latest fragile performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with IDT and Telecom Argentina

The main advantage of trading using opposite IDT and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDT 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 IDT Corporation 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 Transaction History module to view history of all your transactions and understand their impact on performance.