Correlation Between Telecom Argentina and INTERSHOP Communications

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

Diversification Opportunities for Telecom Argentina and INTERSHOP Communications

-0.23

Correlation Coefficient

Telecom Argentina  INTERSHOP Communications

Very good diversification

The 3 months correlation between Telecom and INTERSHOP is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina SA and INTERSHOP Communications Aktie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERSHOP Communications 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 INTERSHOP Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERSHOP Communications has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and INTERSHOP Communications go up and down completely randomly.

Pair Corralation between Telecom Argentina and INTERSHOP Communications

Assuming the 90 days horizon Telecom Argentina SA is expected to generate 2.35 times more return on investment than INTERSHOP Communications. However, Telecom Argentina is 2.35 times more volatile than INTERSHOP Communications Aktiengesellschaft. It trades about 0.21 of its potential returns per unit of risk. INTERSHOP Communications Aktiengesellschaft is currently generating about -0.08 per unit of risk. If you would invest  720.00  in Telecom Argentina SA on October 25, 2024 and sell it today you would earn a total of  470.00  from holding Telecom Argentina SA or generate 65.28% return on investment over 90 days.

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

Telecom Argentina SA  vs.  INTERSHOP Communications Aktie

Telecom Argentina

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Argentina SA are ranked lower than 16 (%) 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.

INTERSHOP Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTERSHOP Communications Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Telecom Argentina and INTERSHOP Communications

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

The idea behind Telecom Argentina SA and INTERSHOP Communications Aktiengesellschaft 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.