Correlation Between Vodacom Group and PCCW
Can any of the company-specific risk be diversified away by investing in both Vodacom Group 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 Vodacom Group and PCCW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vodacom Group Ltd and PCCW Limited, you can compare the effects of market volatilities on Vodacom Group 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 Vodacom Group with a short position of PCCW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodacom Group and PCCW.
Diversification Opportunities for Vodacom Group and PCCW
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vodacom and PCCW is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vodacom Group Ltd and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited and Vodacom Group 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 Vodacom Group Ltd 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 Vodacom Group i.e., Vodacom Group and PCCW go up and down completely randomly.
Pair Corralation between Vodacom Group and PCCW
Assuming the 90 days horizon Vodacom Group Ltd is expected to generate 0.59 times more return on investment than PCCW. However, Vodacom Group Ltd is 1.69 times less risky than PCCW. It trades about 0.18 of its potential returns per unit of risk. PCCW Limited is currently generating about 0.08 per unit of risk. If you would invest 537.00 in Vodacom Group Ltd on October 23, 2024 and sell it today you would earn a total of 28.00 from holding Vodacom Group Ltd or generate 5.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vodacom Group Ltd vs. PCCW Limited
Performance |
| Timeline |
| Vodacom Group |
| PCCW Limited |
Vodacom Group and PCCW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodacom Group and PCCW
The main advantage of trading using opposite Vodacom Group and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodacom Group 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.| Vodacom Group vs. XL Axiata Tbk | Vodacom Group vs. Telenor ASA ADR | Vodacom Group vs. Tele2 AB | Vodacom Group vs. MTN Group Ltd |
| 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 CEOs Directory module to screen CEOs from public companies around the world.
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