Correlation Between Vodafone Group and HKT Trust
Can any of the company-specific risk be diversified away by investing in both Vodafone Group and HKT Trust 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 Vodafone Group and HKT Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vodafone Group PLC and HKT Trust ADR, you can compare the effects of market volatilities on Vodafone Group and HKT Trust 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 Vodafone Group with a short position of HKT Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and HKT Trust.
Diversification Opportunities for Vodafone Group and HKT Trust
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vodafone and HKT is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and HKT Trust ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HKT Trust ADR and Vodafone 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 Vodafone Group PLC are associated (or correlated) with HKT Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HKT Trust ADR has no effect on the direction of Vodafone Group i.e., Vodafone Group and HKT Trust go up and down completely randomly.
Pair Corralation between Vodafone Group and HKT Trust
Assuming the 90 days horizon Vodafone Group PLC is expected to generate 1.41 times more return on investment than HKT Trust. However, Vodafone Group is 1.41 times more volatile than HKT Trust ADR. It trades about 0.03 of its potential returns per unit of risk. HKT Trust ADR is currently generating about 0.02 per unit of risk. If you would invest 90.00 in Vodafone Group PLC on August 28, 2024 and sell it today you would lose (4.00) from holding Vodafone Group PLC or give up 4.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.84% |
| Values | Daily Returns |
Vodafone Group PLC vs. HKT Trust ADR
Performance |
| Timeline |
| Vodafone Group PLC |
| HKT Trust ADR |
Vodafone Group and HKT Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodafone Group and HKT Trust
The main advantage of trading using opposite Vodafone Group and HKT Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group position performs unexpectedly, HKT Trust 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 HKT Trust will offset losses from the drop in HKT Trust's long position.| Vodafone Group vs. KDDI Corp | Vodafone Group vs. Amrica Mvil, SAB | Vodafone Group vs. ATT Inc | Vodafone Group vs. FingerMotion |
| HKT Trust vs. KDDI Corp | HKT Trust vs. Amrica Mvil, SAB | HKT Trust vs. ATT Inc | HKT Trust vs. FingerMotion |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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