Correlation Between America Movil and PCCW

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

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

Diversification Opportunities for America Movil and PCCW

-0.15

Correlation Coefficient

America Movil  PCCW

Good diversification

The 3 months correlation between America and PCCW is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding America Movil SAB and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited and America Movil 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 America Movil SAB 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 America Movil i.e., America Movil and PCCW go up and down completely randomly.

Pair Corralation between America Movil and PCCW

Considering the 90-day investment horizon America Movil SAB is expected to under-perform the PCCW. But the stock apears to be less risky and, when comparing its historical volatility, America Movil SAB is 3.33 times less risky than PCCW. The stock trades about -0.08 of its potential returns per unit of risk. The PCCW Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  506.00  in PCCW Limited on September 12, 2024 and sell it today you would earn a total of  58.00  from holding PCCW Limited or generate 11.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

America Movil SAB  vs.  PCCW Limited

America Movil SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days America Movil SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's primary 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

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PCCW Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, PCCW showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with America Movil and PCCW

The main advantage of trading using opposite America Movil and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if America Movil 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 America Movil SAB 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.