Correlation Between Axiata Group and Telekom Malaysia
Can any of the company-specific risk be diversified away by investing in both Axiata Group and Telekom Malaysia 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 Axiata Group and Telekom Malaysia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axiata Group Bhd and Telekom Malaysia Bhd, you can compare the effects of market volatilities on Axiata Group and Telekom Malaysia 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 Axiata Group with a short position of Telekom Malaysia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axiata Group and Telekom Malaysia.
Diversification Opportunities for Axiata Group and Telekom Malaysia
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axiata and Telekom is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Axiata Group Bhd and Telekom Malaysia Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telekom Malaysia Bhd and Axiata Group 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 Axiata Group Bhd are associated (or correlated) with Telekom Malaysia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telekom Malaysia Bhd has no effect on the direction of Axiata Group i.e., Axiata Group and Telekom Malaysia go up and down completely randomly.
Pair Corralation between Axiata Group and Telekom Malaysia
Assuming the 90 days trading horizon Axiata Group Bhd is expected to generate 1.5 times more return on investment than Telekom Malaysia. However, Axiata Group is 1.5 times more volatile than Telekom Malaysia Bhd. It trades about 0.05 of its potential returns per unit of risk. Telekom Malaysia Bhd is currently generating about -0.06 per unit of risk. If you would invest 235.00 in Axiata Group Bhd on September 5, 2024 and sell it today you would earn a total of 3.00 from holding Axiata Group Bhd or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axiata Group Bhd vs. Telekom Malaysia Bhd
Performance |
| Timeline |
| Axiata Group Bhd |
| Telekom Malaysia Bhd |
Axiata Group and Telekom Malaysia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axiata Group and Telekom Malaysia
The main advantage of trading using opposite Axiata Group and Telekom Malaysia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axiata Group position performs unexpectedly, Telekom Malaysia 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 Telekom Malaysia will offset losses from the drop in Telekom Malaysia's long position.| Axiata Group vs. Petronas Chemicals Group | Axiata Group vs. YX Precious Metals | Axiata Group vs. Apollo Food Holdings | Axiata Group vs. Oriental Food Industries |
| Telekom Malaysia vs. Al Aqar Healthcare | Telekom Malaysia vs. YX Precious Metals | Telekom Malaysia vs. YTL Hospitality REIT | Telekom Malaysia vs. Central Industrial Corp |
Check out your portfolio center.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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