Correlation Between Telecom Argentina and NVIDIA

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

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

Diversification Opportunities for Telecom Argentina and NVIDIA

-0.49

Correlation Coefficient

Telecom Argentina  NVIDIA

Very good diversification

The 3 months correlation between Telecom and NVIDIA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Argentina and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA and Telecom Argentina 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 Telecom Argentina are associated (or correlated) with NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of Telecom Argentina i.e., Telecom Argentina and NVIDIA go up and down completely randomly.

Pair Corralation between Telecom Argentina and NVIDIA

Assuming the 90 days trading horizon Telecom Argentina is expected to generate 23.74 times less return on investment than NVIDIA. In addition to that, Telecom Argentina is 1.12 times more volatile than NVIDIA. It trades about 0.01 of its total potential returns per unit of risk. NVIDIA is currently generating about 0.39 per unit of volatility. If you would invest  554,962  in NVIDIA on April 25, 2025 and sell it today you would earn a total of  345,038  from holding NVIDIA or generate 62.17% return on investment over 90 days.

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

Telecom Argentina  vs.  NVIDIA

Telecom Argentina

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Argentina are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Telecom Argentina is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NVIDIA

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NVIDIA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telecom Argentina and NVIDIA

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

The idea behind Telecom Argentina and NVIDIA 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 Transaction History module to view history of all your transactions and understand their impact on performance.