Correlation Between PCCW and Hellenic Telecommunicatio

Can any of the company-specific risk be diversified away by investing in both PCCW and Hellenic 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 Hellenic 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 Hellenic Telecommunications Org, you can compare the effects of market volatilities on PCCW and Hellenic 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 Hellenic Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCCW and Hellenic Telecommunicatio.

Diversification Opportunities for PCCW and Hellenic Telecommunicatio

0.44

Correlation Coefficient

PCCW  Hellenic Telecommunicatio

Very weak diversification

The 3 months correlation between PCCW and Hellenic is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding PCCW Limited and Hellenic Telecommunications Or in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hellenic 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 Hellenic Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hellenic Telecommunicatio has no effect on the direction of PCCW i.e., PCCW and Hellenic Telecommunicatio go up and down completely randomly.

Pair Corralation between PCCW and Hellenic Telecommunicatio

Assuming the 90 days horizon PCCW is expected to generate 1.21 times less return on investment than Hellenic Telecommunicatio. In addition to that, PCCW is 2.01 times more volatile than Hellenic Telecommunications Org. It trades about 0.07 of its total potential returns per unit of risk. Hellenic Telecommunications Org is currently generating about 0.17 per unit of volatility. If you would invest  735.00  in Hellenic Telecommunications Org on January 31, 2025 and sell it today you would earn a total of  215.00  from holding Hellenic Telecommunications Org or generate 29.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

PCCW Limited  vs.  Hellenic Telecommunications Or

PCCW Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PCCW Limited are ranked lower than 5 (%) 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.

Hellenic Telecommunicatio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hellenic Telecommunications Org are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Hellenic Telecommunicatio showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PCCW and Hellenic Telecommunicatio

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

The idea behind PCCW Limited and Hellenic Telecommunications Org 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.