Correlation Between Telecom Argentina and WESTERN COPPER

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

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

Diversification Opportunities for Telecom Argentina and WESTERN COPPER

0.35

Correlation Coefficient

Telecom Argentina  WESTERN COPPER

Weak diversification

The 3 months correlation between Telecom and WESTERN is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina SA and WESTERN PER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN COPPER 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 SA are associated (or correlated) with WESTERN COPPER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN COPPER has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and WESTERN COPPER go up and down completely randomly.

Pair Corralation between Telecom Argentina and WESTERN COPPER

Assuming the 90 days horizon Telecom Argentina SA is expected to under-perform the WESTERN COPPER. In addition to that, Telecom Argentina is 1.75 times more volatile than WESTERN PER. It trades about -0.07 of its total potential returns per unit of risk. WESTERN PER is currently generating about 0.06 per unit of volatility. If you would invest  96.00  in WESTERN PER on December 23, 2024 and sell it today you would earn a total of  6.00  from holding WESTERN PER or generate 6.25% return on investment over 90 days.

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

Telecom Argentina SA  vs.  WESTERN PER

Telecom Argentina

Risk-Adjusted Performance

Very Weak

Over the last 90 days Telecom Argentina SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

WESTERN COPPER

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WESTERN PER are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WESTERN COPPER may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Telecom Argentina and WESTERN COPPER

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

The idea behind Telecom Argentina SA and WESTERN PER 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 CEOs Directory module to screen CEOs from public companies around the world.