Correlation Between PCCW and Shenandoah Telecommunicatio

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

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

Diversification Opportunities for PCCW and Shenandoah Telecommunicatio

-0.19

Correlation Coefficient

PCCW  Shenandoah Telecommunicatio

Good diversification

The 3 months correlation between PCCW and Shenandoah is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding PCCW Limited and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of PCCW i.e., PCCW and Shenandoah Telecommunicatio go up and down completely randomly.

Pair Corralation between PCCW and Shenandoah Telecommunicatio

Assuming the 90 days horizon PCCW Limited is expected to generate 1.3 times more return on investment than Shenandoah Telecommunicatio. However, PCCW is 1.3 times more volatile than Shenandoah Telecommunications Co. It trades about 0.05 of its potential returns per unit of risk. Shenandoah Telecommunications Co is currently generating about -0.02 per unit of risk. If you would invest  55.00  in PCCW Limited on September 28, 2024 and sell it today you would earn a total of  4.00  from holding PCCW Limited or generate 7.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PCCW Limited  vs.  Shenandoah Telecommunications

PCCW Limited

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PCCW Limited are ranked lower than 3 (%) 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.

Shenandoah Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenandoah Telecommunications Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PCCW and Shenandoah Telecommunicatio

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

The idea behind PCCW Limited and Shenandoah Telecommunications Co 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.