Correlation Between XL Axiata and Vodacom Group
Can any of the company-specific risk be diversified away by investing in both XL Axiata and Vodacom Group 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 Vodacom Group 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 Vodacom Group Ltd, you can compare the effects of market volatilities on XL Axiata and Vodacom Group 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 Vodacom Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of XL Axiata and Vodacom Group.
Diversification Opportunities for XL Axiata and Vodacom Group
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PTXKY and Vodacom is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding XL Axiata Tbk and Vodacom Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodacom Group 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 Vodacom Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodacom Group has no effect on the direction of XL Axiata i.e., XL Axiata and Vodacom Group go up and down completely randomly.
Pair Corralation between XL Axiata and Vodacom Group
Assuming the 90 days horizon XL Axiata Tbk is expected to generate 2.04 times more return on investment than Vodacom Group. However, XL Axiata is 2.04 times more volatile than Vodacom Group Ltd. It trades about 0.02 of its potential returns per unit of risk. Vodacom Group Ltd is currently generating about 0.01 per unit of risk. If you would invest 261.00 in XL Axiata Tbk on August 28, 2024 and sell it today you would lose (5.00) from holding XL Axiata Tbk or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.43% |
| Values | Daily Returns |
XL Axiata Tbk vs. Vodacom Group Ltd
Performance |
| Timeline |
| XL Axiata Tbk |
| Vodacom Group |
XL Axiata and Vodacom Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XL Axiata and Vodacom Group
The main advantage of trading using opposite XL Axiata and Vodacom Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XL Axiata position performs unexpectedly, Vodacom Group 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 Vodacom Group will offset losses from the drop in Vodacom Group'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 |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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