Correlation Between ATT and XL Axiata
Can any of the company-specific risk be diversified away by investing in both ATT and XL Axiata 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 ATT and XL Axiata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and XL Axiata Tbk, you can compare the effects of market volatilities on ATT and XL Axiata 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 ATT with a short position of XL Axiata. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and XL Axiata.
Diversification Opportunities for ATT and XL Axiata
Excellent diversification
The 3 months correlation between ATT and PTXKY is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and XL Axiata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Axiata Tbk and ATT 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 ATT Inc are associated (or correlated) with XL Axiata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Axiata Tbk has no effect on the direction of ATT i.e., ATT and XL Axiata go up and down completely randomly.
Pair Corralation between ATT and XL Axiata
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.38 times more return on investment than XL Axiata. However, ATT Inc is 2.66 times less risky than XL Axiata. It trades about 0.05 of its potential returns per unit of risk. XL Axiata Tbk is currently generating about 0.02 per unit of risk. If you would invest 1,692 in ATT Inc on August 27, 2024 and sell it today you would earn a total of 626.00 from holding ATT Inc or generate 37.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
ATT Inc vs. XL Axiata Tbk
Performance |
| Timeline |
| ATT Inc |
| XL Axiata Tbk |
ATT and XL Axiata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and XL Axiata
The main advantage of trading using opposite ATT and XL Axiata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, XL Axiata 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 XL Axiata will offset losses from the drop in XL Axiata's long position.The idea behind ATT Inc and XL Axiata Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| XL Axiata vs. Vodafone Group PLC | XL Axiata vs. KDDI Corp | XL Axiata vs. Amrica Mvil, SAB | XL Axiata vs. ATT Inc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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