Correlation Between TuanChe ADR and Telefonica

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

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

Diversification Opportunities for TuanChe ADR and Telefonica

-0.8

Correlation Coefficient

TuanChe ADR  Telefonica

Pay attention - limited upside

The 3 months correlation between TuanChe and Telefonica is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding TuanChe ADR and Telefonica SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica SA ADR and TuanChe ADR 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 TuanChe ADR are associated (or correlated) with Telefonica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica SA ADR has no effect on the direction of TuanChe ADR i.e., TuanChe ADR and Telefonica go up and down completely randomly.

Pair Corralation between TuanChe ADR and Telefonica

Allowing for the 90-day total investment horizon TuanChe ADR is expected to under-perform the Telefonica. In addition to that, TuanChe ADR is 4.62 times more volatile than Telefonica SA ADR. It trades about -0.13 of its total potential returns per unit of risk. Telefonica SA ADR is currently generating about 0.23 per unit of volatility. If you would invest  402.00  in Telefonica SA ADR on December 29, 2024 and sell it today you would earn a total of  61.00  from holding Telefonica SA ADR or generate 15.17% return on investment over 90 days.

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

TuanChe ADR  vs.  Telefonica SA ADR

TuanChe ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days TuanChe ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Telefonica SA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Telefonica SA ADR are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Telefonica reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TuanChe ADR and Telefonica

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

The idea behind TuanChe ADR and Telefonica SA ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.