Correlation Between XL Axiata and SwissCom
Can any of the company-specific risk be diversified away by investing in both XL Axiata and SwissCom 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 SwissCom 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 SwissCom AG, you can compare the effects of market volatilities on XL Axiata and SwissCom 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 SwissCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of XL Axiata and SwissCom.
Diversification Opportunities for XL Axiata and SwissCom
Poor diversification
The 3 months correlation between PTXKY and SwissCom is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding XL Axiata Tbk and SwissCom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SwissCom AG 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 SwissCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SwissCom AG has no effect on the direction of XL Axiata i.e., XL Axiata and SwissCom go up and down completely randomly.
Pair Corralation between XL Axiata and SwissCom
Assuming the 90 days horizon XL Axiata Tbk is expected to under-perform the SwissCom. In addition to that, XL Axiata is 3.84 times more volatile than SwissCom AG. It trades about -0.09 of its total potential returns per unit of risk. SwissCom AG is currently generating about -0.23 per unit of volatility. If you would invest 6,137 in SwissCom AG on September 1, 2024 and sell it today you would lose (366.00) from holding SwissCom AG or give up 5.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
XL Axiata Tbk vs. SwissCom AG
Performance |
| Timeline |
| XL Axiata Tbk |
| SwissCom AG |
XL Axiata and SwissCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XL Axiata and SwissCom
The main advantage of trading using opposite XL Axiata and SwissCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XL Axiata position performs unexpectedly, SwissCom 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 SwissCom will offset losses from the drop in SwissCom'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 |
| SwissCom vs. Telecom Argentina SA | SwissCom vs. Rogers Communications | SwissCom vs. Magyar Telekom Plc | SwissCom vs. Hellenic Telecommunications Org |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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