Correlation Between Lumen Technologies and PCCW
Can any of the company-specific risk be diversified away by investing in both Lumen Technologies and PCCW 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 Lumen Technologies and PCCW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumen Technologies and PCCW Limited, you can compare the effects of market volatilities on Lumen Technologies and PCCW 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 Lumen Technologies with a short position of PCCW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumen Technologies and PCCW.
Diversification Opportunities for Lumen Technologies and PCCW
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lumen and PCCW is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited and Lumen Technologies 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 Lumen Technologies are associated (or correlated) with PCCW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCCW Limited has no effect on the direction of Lumen Technologies i.e., Lumen Technologies and PCCW go up and down completely randomly.
Pair Corralation between Lumen Technologies and PCCW
Given the investment horizon of 90 days Lumen Technologies is expected to generate 1.39 times more return on investment than PCCW. However, Lumen Technologies is 1.39 times more volatile than PCCW Limited. It trades about 0.2 of its potential returns per unit of risk. PCCW Limited is currently generating about 0.02 per unit of risk. If you would invest 628.00 in Lumen Technologies on August 25, 2024 and sell it today you would earn a total of 160.00 from holding Lumen Technologies or generate 25.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumen Technologies vs. PCCW Limited
Performance |
| Timeline |
| Lumen Technologies |
| PCCW Limited |
Lumen Technologies and PCCW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumen Technologies and PCCW
The main advantage of trading using opposite Lumen Technologies and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumen Technologies position performs unexpectedly, PCCW 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 PCCW will offset losses from the drop in PCCW's long position.| Lumen Technologies vs. Consolidated Communications | Lumen Technologies vs. Cogent Communications Group | Lumen Technologies vs. Liberty Broadband Srs | Lumen Technologies vs. Ribbon Communications |
| PCCW vs. Telenor ASA ADR | PCCW vs. Hellenic Telecommunications Org | PCCW vs. Orange SA ADR | PCCW vs. Telefonica SA ADR |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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