Correlation Between Telefonica Brasil and Grab Holdings

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

Diversification Opportunities for Telefonica Brasil and Grab Holdings

-0.8

Correlation Coefficient

Telefonica Brasil  Grab Holdings

Pay attention - limited upside

The 3 months correlation between Telefonica and Grab is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and Grab Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grab Holdings 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 Grab Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grab Holdings has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and Grab Holdings go up and down completely randomly.

Pair Corralation between Telefonica Brasil and Grab Holdings

Considering the 90-day investment horizon Telefonica Brasil SA is expected to under-perform the Grab Holdings. In addition to that, Telefonica Brasil is 1.11 times more volatile than Grab Holdings. It trades about -0.23 of its total potential returns per unit of risk. Grab Holdings is currently generating about -0.15 per unit of volatility. If you would invest  518.00  in Grab Holdings on September 28, 2024 and sell it today you would lose (37.00) from holding Grab Holdings or give up 7.14% of portfolio value over 90 days.

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

Telefonica Brasil SA  vs.  Grab Holdings

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.

Grab Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grab Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Grab Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telefonica Brasil and Grab Holdings

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

The idea behind Telefonica Brasil SA and Grab Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.