Correlation Between Mobivity Holdings and Telefonica Brasil

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

Diversification Opportunities for Mobivity Holdings and Telefonica Brasil

-0.04

Correlation Coefficient

Mobivity Holdings  Telefonica Brasil

Good diversification

The 3 months correlation between Mobivity and Telefonica is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Mobivity 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 Mobivity 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 Mobivity 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 Mobivity Holdings i.e., Mobivity Holdings and Telefonica Brasil go up and down completely randomly.

Pair Corralation between Mobivity Holdings and Telefonica Brasil

Given the investment horizon of 90 days Mobivity Holdings is expected to generate 7.08 times more return on investment than Telefonica Brasil. However, Mobivity Holdings is 7.08 times more volatile than Telefonica Brasil SA. It trades about 0.03 of its potential returns per unit of risk. Telefonica Brasil SA is currently generating about 0.03 per unit of risk. If you would invest  114.00  in Mobivity Holdings on December 2, 2024 and sell it today you would lose (74.00) from holding Mobivity Holdings or give up 64.91% of portfolio value over 90 days.

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

Mobivity Holdings  vs.  Telefonica Brasil SA

Mobivity Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mobivity Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Mobivity Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Telefonica Brasil

Risk-Adjusted Performance

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 fairly stable forward indicators, Telefonica Brasil is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Mobivity Holdings and Telefonica Brasil

The main advantage of trading using opposite Mobivity Holdings and Telefonica Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mobivity 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 Mobivity 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.