Correlation Between Telefonica Brasil and ATT

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

Diversification Opportunities for Telefonica Brasil and ATT

0.59

Correlation Coefficient

Telefonica Brasil  ATT

Very weak diversification

The 3 months correlation between Telefonica and ATT is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and ATT go up and down completely randomly.

Pair Corralation between Telefonica Brasil and ATT

Considering the 90-day investment horizon Telefonica Brasil SA is expected to under-perform the ATT. In addition to that, Telefonica Brasil is 2.38 times more volatile than ATT Inc. It trades about -0.05 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.07 per unit of volatility. If you would invest  2,127  in ATT Inc on September 28, 2024 and sell it today you would earn a total of  300.00  from holding ATT Inc or generate 14.1% return on investment over 90 days.

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

Telefonica Brasil SA  vs.  ATT 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 weak 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.

ATT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Telefonica Brasil and ATT

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

The idea behind Telefonica Brasil SA and ATT 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.