Correlation Between XL Axiata and PCCW
Can any of the company-specific risk be diversified away by investing in both XL Axiata 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 XL Axiata and PCCW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XL Axiata Tbk and PCCW Limited, you can compare the effects of market volatilities on XL Axiata 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 XL Axiata with a short position of PCCW. Check out your portfolio center. Please also check ongoing floating volatility patterns of XL Axiata and PCCW.
Diversification Opportunities for XL Axiata and PCCW
Good diversification
The 3 months correlation between PTXKY and PCCW is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding XL Axiata Tbk and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited and XL Axiata 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 XL Axiata Tbk 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 XL Axiata i.e., XL Axiata and PCCW go up and down completely randomly.
Pair Corralation between XL Axiata and PCCW
Assuming the 90 days horizon XL Axiata is expected to generate 1.93 times less return on investment than PCCW. In addition to that, XL Axiata is 1.28 times more volatile than PCCW Limited. It trades about 0.02 of its total potential returns per unit of risk. PCCW Limited is currently generating about 0.05 per unit of volatility. If you would invest 44.00 in PCCW Limited on November 3, 2024 and sell it today you would earn a total of 14.00 from holding PCCW Limited or generate 31.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XL Axiata Tbk vs. PCCW Limited
Performance |
| Timeline |
| XL Axiata Tbk |
| PCCW Limited |
XL Axiata and PCCW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XL Axiata and PCCW
The main advantage of trading using opposite XL Axiata and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XL Axiata 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.| XL Axiata vs. MTN Group Ltd | XL Axiata vs. Vodacom Group Ltd | XL Axiata vs. Telenor ASA ADR | XL Axiata vs. KT Corporation |
| PCCW vs. Telenor ASA ADR | PCCW vs. Hellenic Telecommunications Org | PCCW vs. Telefonica SA ADR | PCCW vs. Telefonica Brasil SA |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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