Correlation Between Telefonica Brasil and Cibl

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

By analyzing existing cross correlation between Telefonica Brasil SA and Cibl Inc, you can compare the effects of market volatilities on Telefonica Brasil and Cibl 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 Telefonica Brasil with a short position of Cibl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and Cibl.

Diversification Opportunities for Telefonica Brasil and Cibl

-0.56

Correlation Coefficient

Telefonica Brasil  Cibl

Excellent diversification

The 3 months correlation between Telefonica and Cibl is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and Cibl Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cibl Inc and Telefonica Brasil 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 Telefonica Brasil SA are associated (or correlated) with Cibl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cibl Inc has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and Cibl go up and down completely randomly.

Pair Corralation between Telefonica Brasil and Cibl

Considering the 90-day investment horizon Telefonica Brasil SA is expected to under-perform the Cibl. But the stock apears to be less risky and, when comparing its historical volatility, Telefonica Brasil SA is 1.23 times less risky than Cibl. The stock trades about -0.13 of its potential returns per unit of risk. The Cibl Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  180,000  in Cibl Inc on September 3, 2024 and sell it today you would lose (2,500) from holding Cibl Inc or give up 1.39% of portfolio value over 90 days.

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

Telefonica Brasil SA  vs.  Cibl Inc

Telefonica Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telefonica Brasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Cibl Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cibl Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Cibl is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Telefonica Brasil and Cibl

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

The idea behind Telefonica Brasil SA and Cibl Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.