Correlation Between Singapore Telecommunicatio and PCCW

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

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

Diversification Opportunities for Singapore Telecommunicatio and PCCW

0.33

Correlation Coefficient

Singapore Telecommunicatio  PCCW

Weak diversification

The 3 months correlation between Singapore and PCCW is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications P and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited and Singapore Telecommunicatio 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 Singapore Telecommunications PK 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 Singapore Telecommunicatio i.e., Singapore Telecommunicatio and PCCW go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and PCCW

Assuming the 90 days horizon Singapore Telecommunicatio is expected to generate 9.42 times less return on investment than PCCW. But when comparing it to its historical volatility, Singapore Telecommunications PK is 4.86 times less risky than PCCW. It trades about 0.05 of its potential returns per unit of risk. PCCW Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. 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 Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Singapore Telecommunications P  vs.  PCCW Limited

Singapore Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Singapore Telecommunications PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with Singapore Telecommunicatio and PCCW

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

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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 Transaction History module to view history of all your transactions and understand their impact on performance.