Correlation Between Telecom Argentina and Grupo Televisa

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

By analyzing existing cross correlation between Telecom Argentina and Grupo Televisa SAB, you can compare the effects of market volatilities on Telecom Argentina and Grupo Televisa 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 Grupo Televisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and Grupo Televisa.

Diversification Opportunities for Telecom Argentina and Grupo Televisa

-0.54

Correlation Coefficient

Telecom Argentina  Grupo Televisa

Excellent diversification

The 3 months correlation between Telecom and Grupo is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina and Grupo Televisa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Televisa SAB 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 Grupo Televisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Televisa SAB has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Grupo Televisa go up and down completely randomly.

Pair Corralation between Telecom Argentina and Grupo Televisa

Assuming the 90 days trading horizon Telecom Argentina is expected to under-perform the Grupo Televisa. In addition to that, Telecom Argentina is 1.19 times more volatile than Grupo Televisa SAB. It trades about -0.04 of its total potential returns per unit of risk. Grupo Televisa SAB is currently generating about 0.07 per unit of volatility. If you would invest  68,600  in Grupo Televisa SAB on December 30, 2024 and sell it today you would earn a total of  6,600  from holding Grupo Televisa SAB or generate 9.62% return on investment over 90 days.

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

Telecom Argentina  vs.  Grupo Televisa SAB

Telecom Argentina

Risk-Adjusted Performance

Very Weak

Over the last 90 days Telecom Argentina has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Grupo Televisa SAB

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Televisa SAB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Grupo Televisa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Telecom Argentina and Grupo Televisa

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

The idea behind Telecom Argentina and Grupo Televisa SAB 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.