Correlation Between Telefonica Brasil and KonaTel

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

Diversification Opportunities for Telefonica Brasil and KonaTel

0.74

Correlation Coefficient

Telefonica Brasil  KonaTel

Poor diversification

The 3 months correlation between Telefonica and KonaTel is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and KonaTel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KonaTel 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 KonaTel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KonaTel has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and KonaTel go up and down completely randomly.

Pair Corralation between Telefonica Brasil and KonaTel

Considering the 90-day investment horizon Telefonica Brasil SA is expected to generate 0.23 times more return on investment than KonaTel. However, Telefonica Brasil SA is 4.34 times less risky than KonaTel. It trades about -0.07 of its potential returns per unit of risk. KonaTel is currently generating about -0.05 per unit of risk. If you would invest  1,016  in Telefonica Brasil SA on October 2, 2024 and sell it today you would lose (261.50) from holding Telefonica Brasil SA or give up 25.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.56%
Values	Daily Returns

Telefonica Brasil SA  vs.  KonaTel

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.

KonaTel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KonaTel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Telefonica Brasil and KonaTel

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

The idea behind Telefonica Brasil SA and KonaTel 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.