Correlation Between Telecom Argentina and Metrogas

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Telecom Argentina and Metrogas 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 Telecom Argentina and Metrogas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Argentina and Metrogas SA, you can compare the effects of market volatilities on Telecom Argentina and Metrogas 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 Telecom Argentina with a short position of Metrogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and Metrogas.

Diversification Opportunities for Telecom Argentina and Metrogas

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Telecom and Metrogas is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina and Metrogas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrogas SA and Telecom Argentina 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 Telecom Argentina are associated (or correlated) with Metrogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrogas SA has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Metrogas go up and down completely randomly.

Pair Corralation between Telecom Argentina and Metrogas

Assuming the 90 days trading horizon Telecom Argentina is expected to generate 2.03 times less return on investment than Metrogas. In addition to that, Telecom Argentina is 1.11 times more volatile than Metrogas SA. It trades about 0.2 of its total potential returns per unit of risk. Metrogas SA is currently generating about 0.44 per unit of volatility. If you would invest  117,000  in Metrogas SA on September 5, 2024 and sell it today you would earn a total of  153,000  from holding Metrogas SA or generate 130.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Telecom Argentina  vs.  Metrogas SA

 Performance 
       Timeline  
Telecom Argentina 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Argentina are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Telecom Argentina sustained solid returns over the last few months and may actually be approaching a breakup point.
Metrogas SA 

Risk-Adjusted Performance

34 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Metrogas SA are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Metrogas sustained solid returns over the last few months and may actually be approaching a breakup point.

Telecom Argentina and Metrogas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Telecom Argentina and Metrogas

The main advantage of trading using opposite Telecom Argentina and Metrogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Argentina position performs unexpectedly, Metrogas 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 Metrogas will offset losses from the drop in Metrogas' long position.
The idea behind Telecom Argentina and Metrogas 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.
Check out your portfolio center.
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

Other Complementary Tools

Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges