Correlation Between Telecom Argentina and Takeda Pharmaceutical

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

Diversification Opportunities for Telecom Argentina and Takeda Pharmaceutical

-0.31

Correlation Coefficient

Telecom Argentina  Takeda Pharmaceutical

Very good diversification

The 3 months correlation between Telecom and Takeda is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina SA and Takeda Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takeda Pharmaceutical 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 Takeda Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takeda Pharmaceutical has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and Takeda Pharmaceutical go up and down completely randomly.

Pair Corralation between Telecom Argentina and Takeda Pharmaceutical

Assuming the 90 days horizon Telecom Argentina SA is expected to generate 3.02 times more return on investment than Takeda Pharmaceutical. However, Telecom Argentina is 3.02 times more volatile than Takeda Pharmaceutical. It trades about 0.07 of its potential returns per unit of risk. Takeda Pharmaceutical is currently generating about -0.02 per unit of risk. If you would invest  507.00  in Telecom Argentina SA on October 4, 2024 and sell it today you would earn a total of  803.00  from holding Telecom Argentina SA or generate 158.38% 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.  Takeda Pharmaceutical

Telecom Argentina

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Argentina SA are ranked lower than 20 (%) 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.

Takeda Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Takeda Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Takeda Pharmaceutical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Telecom Argentina and Takeda Pharmaceutical

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

The idea behind Telecom Argentina SA and Takeda Pharmaceutical 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..