Correlation Between PCCW and Dow Jones
Can any of the company-specific risk be diversified away by investing in both PCCW and Dow Jones 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 PCCW and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PCCW Limited and Dow Jones Industrial, you can compare the effects of market volatilities on PCCW and Dow Jones 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 PCCW with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCCW and Dow Jones.
Diversification Opportunities for PCCW and Dow Jones
Very good diversification
The 3 months correlation between PCCW and Dow is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding PCCW Limited and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and PCCW 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 PCCW Limited are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of PCCW i.e., PCCW and Dow Jones go up and down completely randomly.
Pair Corralation between PCCW and Dow Jones
Assuming the 90 days horizon PCCW Limited is expected to generate 5.63 times more return on investment than Dow Jones. However, PCCW is 5.63 times more volatile than Dow Jones Industrial. It trades about 0.03 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 45.00 in PCCW Limited on August 29, 2024 and sell it today you would earn a total of 5.00 from holding PCCW Limited or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.09% |
| Values | Daily Returns |
PCCW Limited vs. Dow Jones Industrial
Performance |
| Timeline |
PCCW and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
PCCW Limited
Pair trading matchups for PCCW
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with PCCW and Dow Jones
The main advantage of trading using opposite PCCW and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCCW position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| PCCW vs. Telenor ASA ADR | PCCW vs. Hellenic Telecommunications Org | PCCW vs. Orange SA ADR | PCCW vs. Telefonica SA ADR |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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