Correlation Between Telecom Argentina and Brown Forman

Can any of the company-specific risk be diversified away by investing in both Telecom Argentina and Brown Forman 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 Brown Forman 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 Brown Forman Corp, you can compare the effects of market volatilities on Telecom Argentina and Brown Forman 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 Brown Forman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Argentina and Brown Forman.

Diversification Opportunities for Telecom Argentina and Brown Forman

-0.68

Correlation Coefficient

Telecom Argentina  Brown Forman

Excellent diversification

The 3 months correlation between Telecom and Brown is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina SA and Brown Forman Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Forman Corp 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 Brown Forman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Forman Corp has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Brown Forman go up and down completely randomly.

Pair Corralation between Telecom Argentina and Brown Forman

Assuming the 90 days horizon Telecom Argentina SA is expected to generate 2.6 times more return on investment than Brown Forman. However, Telecom Argentina is 2.6 times more volatile than Brown Forman Corp. It trades about 0.1 of its potential returns per unit of risk. Brown Forman Corp is currently generating about -0.59 per unit of risk. If you would invest  1,260  in Telecom Argentina SA on October 9, 2024 and sell it today you would earn a total of  70.00  from holding Telecom Argentina SA or generate 5.56% return on investment over 90 days.

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

Telecom Argentina SA  vs.  Brown Forman Corp

Telecom Argentina

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Argentina SA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Telecom Argentina reported solid returns over the last few months and may actually be approaching a breakup point.

Brown Forman Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brown Forman Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Telecom Argentina and Brown Forman

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

The idea behind Telecom Argentina SA and Brown Forman Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.