Correlation Between BCE and Axiata Group

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

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

Diversification Opportunities for BCE and Axiata Group

-0.33

Correlation Coefficient

BCE  Axiata Group

Very good diversification

The 3 months correlation between BCE and Axiata is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Axiata Group Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axiata Group Berhad and BCE 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 BCE Inc are associated (or correlated) with Axiata Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axiata Group Berhad has no effect on the direction of BCE i.e., BCE and Axiata Group go up and down completely randomly.

Pair Corralation between BCE and Axiata Group

If you would invest  1,069  in BCE Inc on October 24, 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	Moves Against
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

BCE Inc  vs.  Axiata Group Berhad

BCE Inc

Risk-Adjusted Performance

10 of 100

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Axiata Group Berhad

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with BCE and Axiata Group

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

The idea behind BCE Inc and Axiata Group Berhad 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.