Correlation Between PCCW and PCCW
Can any of the company-specific risk be diversified away by investing in both PCCW 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 PCCW and PCCW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PCCW Limited and PCCW Limited, you can compare the effects of market volatilities on PCCW 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 PCCW with a short position of PCCW. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCCW and PCCW.
Diversification Opportunities for PCCW and PCCW
Good diversification
The 3 months correlation between PCCW and PCCW is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding PCCW Limited and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited 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 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 PCCW i.e., PCCW and PCCW go up and down completely randomly.
Pair Corralation between PCCW and PCCW
Assuming the 90 days horizon PCCW Limited is expected to generate 1.55 times more return on investment than PCCW. However, PCCW is 1.55 times more volatile than PCCW Limited. It trades about 0.04 of its potential returns per unit of risk. PCCW Limited is currently generating about 0.04 per unit of risk. If you would invest 36.00 in PCCW Limited on September 4, 2024 and sell it today you would earn a total of 16.00 from holding PCCW Limited or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.38% |
| Values | Daily Returns |
PCCW Limited vs. PCCW Limited
Performance |
| Timeline |
| PCCW Limited |
| PCCW Limited |
PCCW and PCCW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PCCW and PCCW
The main advantage of trading using opposite PCCW and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCCW 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.| PCCW vs. Telenor ASA ADR | PCCW vs. Hellenic Telecommunications Org | PCCW vs. Orange SA ADR | PCCW vs. Telefonica SA ADR |
| PCCW vs. PCCW Limited | PCCW vs. New World Development | PCCW vs. Guangdong Investment | PCCW vs. Bank of East |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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