Correlation Between XL Axiata and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both XL Axiata and Telenor ASA 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 Telenor ASA 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 Telenor ASA ADR, you can compare the effects of market volatilities on XL Axiata and Telenor ASA 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 Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of XL Axiata and Telenor ASA.
Diversification Opportunities for XL Axiata and Telenor ASA
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PTXKY and Telenor is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding XL Axiata Tbk and Telenor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA ADR 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 Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA ADR has no effect on the direction of XL Axiata i.e., XL Axiata and Telenor ASA go up and down completely randomly.
Pair Corralation between XL Axiata and Telenor ASA
Assuming the 90 days horizon XL Axiata Tbk is expected to under-perform the Telenor ASA. In addition to that, XL Axiata is 2.35 times more volatile than Telenor ASA ADR. It trades about -0.06 of its total potential returns per unit of risk. Telenor ASA ADR is currently generating about -0.01 per unit of volatility. If you would invest 1,186 in Telenor ASA ADR on August 30, 2024 and sell it today you would lose (9.00) from holding Telenor ASA ADR or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XL Axiata Tbk vs. Telenor ASA ADR
Performance |
| Timeline |
| XL Axiata Tbk |
| Telenor ASA ADR |
XL Axiata and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XL Axiata and Telenor ASA
The main advantage of trading using opposite XL Axiata and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XL Axiata position performs unexpectedly, Telenor ASA 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 Telenor ASA will offset losses from the drop in Telenor ASA'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 |
| Telenor ASA vs. Bank Rakyat | Telenor ASA vs. PT Bank Rakyat | Telenor ASA vs. Samsung Electronics Co | Telenor ASA vs. Bank Mandiri Persero |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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