Correlation Between Axiata Group and BCE

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

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

Diversification Opportunities for Axiata Group and BCE

0.0

Correlation Coefficient

Axiata Group  BCE

Pay attention - limited upside

The 3 months correlation between Axiata and BCE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Axiata Group Berhad and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Axiata 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 Axiata Group Berhad are associated (or correlated) with BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of Axiata Group i.e., Axiata Group and BCE go up and down completely randomly.

Pair Corralation between Axiata Group and BCE

If you would invest  1,069  in BCE Inc on December 20, 2024 and sell it today you would earn a total of  31.00  from holding BCE Inc or generate 2.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Axiata Group Berhad  vs.  BCE Inc

Axiata Group Berhad

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axiata Group Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Axiata Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BCE Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BCE Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BCE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Axiata Group and BCE

The main advantage of trading using opposite Axiata Group and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axiata Group position performs unexpectedly, BCE 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 BCE will offset losses from the drop in BCE's long position.

The idea behind Axiata Group Berhad and BCE Inc 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.