Correlation Between Magyar Telekom and PCCW
Can any of the company-specific risk be diversified away by investing in both Magyar Telekom 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 Magyar Telekom and PCCW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magyar Telekom Plc and PCCW Limited, you can compare the effects of market volatilities on Magyar Telekom 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 Magyar Telekom with a short position of PCCW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magyar Telekom and PCCW.
Diversification Opportunities for Magyar Telekom and PCCW
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magyar and PCCW is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Telekom Plc and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited and Magyar Telekom 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 Magyar Telekom Plc 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 Magyar Telekom i.e., Magyar Telekom and PCCW go up and down completely randomly.
Pair Corralation between Magyar Telekom and PCCW
Assuming the 90 days horizon Magyar Telekom Plc is expected to generate 0.45 times more return on investment than PCCW. However, Magyar Telekom Plc is 2.23 times less risky than PCCW. It trades about 0.13 of its potential returns per unit of risk. PCCW Limited is currently generating about 0.04 per unit of risk. If you would invest 1,443 in Magyar Telekom Plc on August 25, 2024 and sell it today you would earn a total of 72.00 from holding Magyar Telekom Plc or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magyar Telekom Plc vs. PCCW Limited
Performance |
| Timeline |
| Magyar Telekom Plc |
| PCCW Limited |
Magyar Telekom and PCCW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magyar Telekom and PCCW
The main advantage of trading using opposite Magyar Telekom and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magyar Telekom 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.| Magyar Telekom vs. HUMANA INC | Magyar Telekom vs. SCOR PK | Magyar Telekom vs. Aquagold International | Magyar Telekom vs. Barloworld Ltd ADR |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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