Correlation Between Telecom Argentina and Metrogas
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Telecom Argentina vs. Metrogas SA
Performance |
Timeline |
Telecom Argentina |
Metrogas SA |
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.Telecom Argentina vs. Agrometal SAI | Telecom Argentina vs. Transportadora de Gas | Telecom Argentina vs. Harmony Gold Mining |
Metrogas vs. Telecom Argentina | Metrogas vs. Harmony Gold Mining | Metrogas vs. Compania de Transporte | Metrogas vs. Transportadora de Gas |
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.
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