Correlation Between Telefnica Brasil and KLA

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

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

Diversification Opportunities for Telefnica Brasil and KLA

0.89

Correlation Coefficient

Telefnica Brasil  KLA

Very poor diversification

The 3 months correlation between Telefnica and KLA is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Telefnica Brasil SA and KLA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Corporation and Telefnica 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 Telefnica Brasil SA are associated (or correlated) with KLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Corporation has no effect on the direction of Telefnica Brasil i.e., Telefnica Brasil and KLA go up and down completely randomly.

Pair Corralation between Telefnica Brasil and KLA

Assuming the 90 days trading horizon Telefnica Brasil is expected to generate 1.82 times less return on investment than KLA. But when comparing it to its historical volatility, Telefnica Brasil SA is 1.58 times less risky than KLA. It trades about 0.16 of its potential returns per unit of risk. KLA Corporation is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  97,720  in KLA Corporation on April 25, 2025 and sell it today you would earn a total of  25,729  from holding KLA Corporation or generate 26.33% return on investment over 90 days.

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

Telefnica Brasil SA  vs.  KLA Corp.

Telefnica Brasil

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telefnica Brasil SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Telefnica Brasil unveiled solid returns over the last few months and may actually be approaching a breakup point.

KLA Corporation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KLA Corporation are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, KLA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telefnica Brasil and KLA

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

The idea behind Telefnica Brasil SA and KLA Corporation 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 CEOs Directory module to screen CEOs from public companies around the world.