Correlation Between Telefonica Brasil and PCCW
Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil 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 Telefonica Brasil and PCCW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonica Brasil SA and PCCW Limited, you can compare the effects of market volatilities on Telefonica Brasil 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 Telefonica Brasil with a short position of PCCW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and PCCW.
Diversification Opportunities for Telefonica Brasil and PCCW
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telefonica and PCCW is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited and Telefonica Brasil 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 Telefonica Brasil SA 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 Telefonica Brasil i.e., Telefonica Brasil and PCCW go up and down completely randomly.
Pair Corralation between Telefonica Brasil and PCCW
Considering the 90-day investment horizon Telefonica Brasil SA is expected to under-perform the PCCW. But the stock apears to be less risky and, when comparing its historical volatility, Telefonica Brasil SA is 2.48 times less risky than PCCW. The stock trades about -0.03 of its potential returns per unit of risk. The 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 | Very Weak |
| Accuracy | 98.79% |
| Values | Daily Returns |
Telefonica Brasil SA vs. PCCW Limited
Performance |
| Timeline |
| Telefonica Brasil |
| PCCW Limited |
Telefonica Brasil and PCCW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica Brasil and PCCW
The main advantage of trading using opposite Telefonica Brasil and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil 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.| Telefonica Brasil vs. Vodafone Group PLC | Telefonica Brasil vs. Grupo Televisa SAB | Telefonica Brasil vs. America Movil SAB | Telefonica Brasil vs. Telefonica SA ADR |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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