Correlation Between Shenandoah Telecommunicatio and PCCW

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Can any of the company-specific risk be diversified away by investing in both Shenandoah 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 Shenandoah Telecommunicatio and PCCW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenandoah Telecommunications Co and PCCW Limited, you can compare the effects of market volatilities on Shenandoah 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 Shenandoah Telecommunicatio with a short position of PCCW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenandoah Telecommunicatio and PCCW.

Diversification Opportunities for Shenandoah Telecommunicatio and PCCW

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Shenandoah and PCCW is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited and Shenandoah 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 Shenandoah Telecommunications Co 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 Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and PCCW go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and PCCW

Given the investment horizon of 90 days Shenandoah Telecommunications Co is expected to under-perform the PCCW. But the stock apears to be less risky and, when comparing its historical volatility, Shenandoah Telecommunications Co is 2.74 times less risky than PCCW. The stock trades about -0.02 of its potential returns per unit of risk. The 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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Shenandoah Telecommunications   vs.  PCCW Limited

 Performance 
       Timeline  
Shenandoah Telecommunicatio 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
PCCW Limited 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
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 and PCCW Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shenandoah Telecommunicatio and PCCW

The main advantage of trading using opposite Shenandoah Telecommunicatio and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenandoah 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 Shenandoah Telecommunications Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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