Correlation Between XL Axiata and Radcom

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

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

Diversification Opportunities for XL Axiata and Radcom

-0.27

Correlation Coefficient

XL Axiata  Radcom

Very good diversification

The 3 months correlation between PTXKY and Radcom is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding XL Axiata Tbk and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and XL Axiata 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 XL Axiata Tbk are associated (or correlated) with Radcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radcom has no effect on the direction of XL Axiata i.e., XL Axiata and Radcom go up and down completely randomly.

Pair Corralation between XL Axiata and Radcom

Assuming the 90 days horizon XL Axiata is expected to generate 43.11 times less return on investment than Radcom. In addition to that, XL Axiata is 1.78 times more volatile than Radcom. It trades about 0.0 of its total potential returns per unit of risk. Radcom is currently generating about 0.25 per unit of volatility. If you would invest  1,187  in Radcom on October 22, 2024 and sell it today you would earn a total of  221.00  from holding Radcom or generate 18.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

XL Axiata Tbk  vs.  Radcom

XL Axiata Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XL Axiata Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, XL Axiata is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Radcom

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Radcom displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XL Axiata and Radcom

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

The idea behind XL Axiata Tbk and Radcom 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .