Correlation Between Telenor ASA and PCCW
Can any of the company-specific risk be diversified away by investing in both Telenor ASA 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 Telenor ASA and PCCW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telenor ASA ADR and PCCW Limited, you can compare the effects of market volatilities on Telenor ASA 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 Telenor ASA with a short position of PCCW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telenor ASA and PCCW.
Diversification Opportunities for Telenor ASA and PCCW
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Telenor and PCCW is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA ADR and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited and Telenor ASA 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 Telenor ASA ADR 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 Telenor ASA i.e., Telenor ASA and PCCW go up and down completely randomly.
Pair Corralation between Telenor ASA and PCCW
Assuming the 90 days horizon Telenor ASA is expected to generate 2.52 times less return on investment than PCCW. But when comparing it to its historical volatility, Telenor ASA ADR is 3.59 times less risky than PCCW. It trades about 0.07 of its potential returns per unit of risk. PCCW Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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 | 99.19% |
| Values | Daily Returns |
Telenor ASA ADR vs. PCCW Limited
Performance |
| Timeline |
| Telenor ASA ADR |
| PCCW Limited |
Telenor ASA and PCCW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telenor ASA and PCCW
The main advantage of trading using opposite Telenor ASA and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telenor ASA 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.| Telenor ASA vs. PCCW Limited | Telenor ASA vs. Hellenic Telecommunications Org | Telenor ASA vs. Telefonica SA ADR | Telenor ASA vs. XL Axiata Tbk |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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