Correlation Between KonaTel and Telefonica Brasil

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

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

Diversification Opportunities for KonaTel and Telefonica Brasil

0.74

Correlation Coefficient

KonaTel  Telefonica Brasil

Poor diversification

The 3 months correlation between KonaTel and Telefonica is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding KonaTel and Telefonica Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica Brasil and KonaTel 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 KonaTel 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 KonaTel i.e., KonaTel and Telefonica Brasil go up and down completely randomly.

Pair Corralation between KonaTel and Telefonica Brasil

Given the investment horizon of 90 days KonaTel is expected to under-perform the Telefonica Brasil. In addition to that, KonaTel is 4.34 times more volatile than Telefonica Brasil SA. It trades about -0.05 of its total potential returns per unit of risk. Telefonica Brasil SA is currently generating about -0.07 per unit of volatility. If you would invest  1,016  in Telefonica Brasil SA on October 2, 2024 and sell it today you would lose (261.50) from holding Telefonica Brasil SA or give up 25.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.56%
Values	Daily Returns

KonaTel  vs.  Telefonica Brasil SA

KonaTel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KonaTel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 KonaTel and Telefonica Brasil

The main advantage of trading using opposite KonaTel and Telefonica Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KonaTel 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 KonaTel 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.