Correlation Between Vodafone Group and PCCW
Can any of the company-specific risk be diversified away by investing in both Vodafone 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 Vodafone Group and PCCW 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 PCCW Limited, you can compare the effects of market volatilities on Vodafone 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 Vodafone Group with a short position of PCCW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and PCCW.
Diversification Opportunities for Vodafone Group and PCCW
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vodafone and PCCW is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited 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 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 Vodafone Group i.e., Vodafone Group and PCCW go up and down completely randomly.
Pair Corralation between Vodafone Group and PCCW
Assuming the 90 days horizon Vodafone Group PLC is expected to generate 1.78 times more return on investment than PCCW. However, Vodafone Group is 1.78 times more volatile than PCCW Limited. It trades about 0.03 of its potential returns per unit of risk. PCCW Limited is currently generating about 0.04 per unit of risk. If you would invest 90.00 in Vodafone Group PLC on September 3, 2024 and sell it today you would lose (2.00) from holding Vodafone Group PLC or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.03% |
| Values | Daily Returns |
Vodafone Group PLC vs. PCCW Limited
Performance |
| Timeline |
| Vodafone Group PLC |
| PCCW Limited |
Vodafone Group and PCCW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodafone Group and PCCW
The main advantage of trading using opposite Vodafone Group and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone 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.| Vodafone Group vs. KDDI Corp | Vodafone Group vs. Amrica Mvil, SAB | Vodafone Group vs. Airtel Africa Plc | Vodafone Group vs. BCE Inc |
| PCCW vs. PCCW Limited | PCCW vs. New World Development | PCCW vs. Guangdong Investment | PCCW vs. Bank of East |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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