Correlation Between Telenor ASA and XL Axiata
Can any of the company-specific risk be diversified away by investing in both Telenor ASA 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 Telenor ASA and XL Axiata 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 XL Axiata Tbk, you can compare the effects of market volatilities on Telenor ASA 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 Telenor ASA with a short position of XL Axiata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telenor ASA and XL Axiata.
Diversification Opportunities for Telenor ASA and XL Axiata
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Telenor and PTXKY is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA ADR 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 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 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 Telenor ASA i.e., Telenor ASA and XL Axiata go up and down completely randomly.
Pair Corralation between Telenor ASA and XL Axiata
Assuming the 90 days horizon Telenor ASA ADR is expected to generate 0.43 times more return on investment than XL Axiata. However, Telenor ASA ADR is 2.35 times less risky than XL Axiata. It trades about -0.01 of its potential returns per unit of risk. XL Axiata Tbk is currently generating about -0.06 per unit of risk. 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 |
Telenor ASA ADR vs. XL Axiata Tbk
Performance |
| Timeline |
| Telenor ASA ADR |
| XL Axiata Tbk |
Telenor ASA and XL Axiata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telenor ASA and XL Axiata
The main advantage of trading using opposite Telenor ASA and XL Axiata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telenor ASA 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.| Telenor ASA vs. Bank Rakyat | Telenor ASA vs. PT Bank Rakyat | Telenor ASA vs. Samsung Electronics Co | Telenor ASA vs. Bank Mandiri Persero |
| XL Axiata vs. MTN Group Ltd | XL Axiata vs. Vodacom Group Ltd | XL Axiata vs. Telenor ASA ADR | XL Axiata vs. KT Corporation |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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