Correlation Between PCCW and PCCW

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

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

Diversification Opportunities for PCCW and PCCW

0.11

Correlation Coefficient

PCCW  PCCW

Average diversification

The 3 months correlation between PCCW and PCCW is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding PCCW Limited and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited and PCCW 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 PCCW Limited 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 PCCW i.e., PCCW and PCCW go up and down completely randomly.

Pair Corralation between PCCW and PCCW

Assuming the 90 days horizon PCCW is expected to generate 1.0 times less return on investment than PCCW. In addition to that, PCCW is 1.01 times more volatile than PCCW Limited. It trades about 0.05 of its total potential returns per unit of risk. PCCW Limited is currently generating about 0.05 per unit of volatility. If you would invest  497.00  in PCCW Limited on October 25, 2024 and sell it today you would earn a total of  72.00  from holding PCCW Limited or generate 14.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

PCCW Limited  vs.  PCCW Limited

PCCW Limited

Risk-Adjusted Performance

4 of 100

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. Despite nearly weak essential indicators, PCCW reported solid returns over the last few months and may actually be approaching a breakup point.

PCCW Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PCCW Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, PCCW is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PCCW and PCCW

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

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 Anywhere module to track or share privately all of your investments from the convenience of any device.