Correlation Between Cardano and PCCW

Can any of the company-specific risk be diversified away by investing in both Cardano 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 Cardano and PCCW into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cardano and PCCW Limited, you can compare the effects of market volatilities on Cardano 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 Cardano with a short position of PCCW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and PCCW.

Diversification Opportunities for Cardano and PCCW

-0.21

Correlation Coefficient

Cardano  PCCW

Very good diversification

The 3 months correlation between Cardano and PCCW is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited and Cardano 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 Cardano 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 Cardano i.e., Cardano and PCCW go up and down completely randomly.

Pair Corralation between Cardano and PCCW

Assuming the 90 days trading horizon Cardano is expected to under-perform the PCCW. In addition to that, Cardano is 1.37 times more volatile than PCCW Limited. It trades about 0.0 of its total potential returns per unit of risk. PCCW Limited is currently generating about 0.06 per unit of volatility. If you would invest  531.00  in PCCW Limited on December 20, 2024 and sell it today you would earn a total of  61.00  from holding PCCW Limited or generate 11.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Cardano  vs.  PCCW Limited

Cardano

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cardano has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cardano is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

PCCW Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PCCW Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, PCCW showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardano and PCCW

The main advantage of trading using opposite Cardano and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano 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.

The idea behind Cardano and PCCW Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.