Correlation Between Yduqs Participaes and Telefnica Brasil

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

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

Diversification Opportunities for Yduqs Participaes and Telefnica Brasil

0.19

Correlation Coefficient

Yduqs Participaes  Telefnica Brasil

Average diversification

The 3 months correlation between Yduqs and Telefnica is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Yduqs Participaes SA and Telefnica Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefnica Brasil and Yduqs Participaes 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 Yduqs Participaes SA are associated (or correlated) with Telefnica Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefnica Brasil has no effect on the direction of Yduqs Participaes i.e., Yduqs Participaes and Telefnica Brasil go up and down completely randomly.

Pair Corralation between Yduqs Participaes and Telefnica Brasil

Assuming the 90 days trading horizon Yduqs Participaes SA is expected to under-perform the Telefnica Brasil. In addition to that, Yduqs Participaes is 2.54 times more volatile than Telefnica Brasil SA. It trades about -0.06 of its total potential returns per unit of risk. Telefnica Brasil SA is currently generating about -0.07 per unit of volatility. If you would invest  5,460  in Telefnica Brasil SA on September 12, 2024 and sell it today you would lose (316.00) from holding Telefnica Brasil SA or give up 5.79% of portfolio value over 90 days.

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

Yduqs Participaes SA  vs.  Telefnica Brasil SA

Yduqs Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yduqs Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Telefnica Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telefnica Brasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Telefnica Brasil is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Yduqs Participaes and Telefnica Brasil

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

The idea behind Yduqs Participaes SA and Telefnica Brasil SA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.