Correlation Between Grupo Televisa and Telecom Argentina

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

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

Diversification Opportunities for Grupo Televisa and Telecom Argentina

-0.52

Correlation Coefficient

Grupo Televisa  Telecom Argentina

Excellent diversification

The 3 months correlation between Grupo and Telecom is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Televisa SAB and Telecom Argentina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina and Grupo Televisa 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 Grupo Televisa SAB are associated (or correlated) with Telecom Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Argentina has no effect on the direction of Grupo Televisa i.e., Grupo Televisa and Telecom Argentina go up and down completely randomly.

Pair Corralation between Grupo Televisa and Telecom Argentina

Assuming the 90 days horizon Grupo Televisa SAB is expected to under-perform the Telecom Argentina. In addition to that, Grupo Televisa is 1.15 times more volatile than Telecom Argentina. It trades about 0.0 of its total potential returns per unit of risk. Telecom Argentina is currently generating about 0.22 per unit of volatility. If you would invest  194,500  in Telecom Argentina on September 4, 2024 and sell it today you would earn a total of  106,500  from holding Telecom Argentina or generate 54.76% return on investment over 90 days.

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

Grupo Televisa SAB  vs.  Telecom Argentina

Grupo Televisa SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Televisa SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Grupo Televisa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Telecom Argentina

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Argentina are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Telecom Argentina sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Televisa and Telecom Argentina

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

The idea behind Grupo Televisa SAB and Telecom Argentina 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.