Correlation Between Airtel Africa and XL Axiata
Can any of the company-specific risk be diversified away by investing in both Airtel Africa and XL Axiata 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 Airtel Africa and XL Axiata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airtel Africa Plc and XL Axiata Tbk, you can compare the effects of market volatilities on Airtel Africa and XL Axiata 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 Airtel Africa with a short position of XL Axiata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airtel Africa and XL Axiata.
Diversification Opportunities for Airtel Africa and XL Axiata
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Airtel and PTXKY is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Airtel Africa Plc and XL Axiata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Axiata Tbk and Airtel Africa 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 Airtel Africa Plc are associated (or correlated) with XL Axiata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Axiata Tbk has no effect on the direction of Airtel Africa i.e., Airtel Africa and XL Axiata go up and down completely randomly.
Pair Corralation between Airtel Africa and XL Axiata
Assuming the 90 days horizon Airtel Africa is expected to generate 1.55 times less return on investment than XL Axiata. But when comparing it to its historical volatility, Airtel Africa Plc is 1.04 times less risky than XL Axiata. It trades about 0.01 of its potential returns per unit of risk. XL Axiata Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 262.00 in XL Axiata Tbk on August 27, 2024 and sell it today you would lose (6.00) from holding XL Axiata Tbk or give up 2.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.46% |
| Values | Daily Returns |
Airtel Africa Plc vs. XL Axiata Tbk
Performance |
| Timeline |
| Airtel Africa Plc |
| XL Axiata Tbk |
Airtel Africa and XL Axiata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airtel Africa and XL Axiata
The main advantage of trading using opposite Airtel Africa and XL Axiata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airtel Africa position performs unexpectedly, XL Axiata 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 XL Axiata will offset losses from the drop in XL Axiata's long position.| Airtel Africa vs. Vodafone Group PLC | Airtel Africa vs. KDDI Corp | Airtel Africa vs. Amrica Mvil, SAB | Airtel Africa vs. ATT Inc |
| XL Axiata vs. Vodafone Group PLC | XL Axiata vs. KDDI Corp | XL Axiata vs. Amrica Mvil, SAB | XL Axiata vs. ATT Inc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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