Correlation Between Barloworld and PCCW

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

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

Diversification Opportunities for Barloworld and PCCW

-0.13

Correlation Coefficient

Barloworld  PCCW

Good diversification

The 3 months correlation between Barloworld and PCCW is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and PCCW Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCCW Limited and Barloworld 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 Barloworld Ltd ADR 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 Barloworld i.e., Barloworld and PCCW go up and down completely randomly.

Pair Corralation between Barloworld and PCCW

If you would invest  423.00  in Barloworld Ltd ADR on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Barloworld Ltd ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Barloworld Ltd ADR  vs.  PCCW Limited

Barloworld ADR

Risk-Adjusted Performance

7 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Barloworld Ltd ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Barloworld showed solid returns over the last few months and may actually be approaching a breakup point.

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 Barloworld and PCCW

The main advantage of trading using opposite Barloworld and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld 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 Barloworld Ltd ADR 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.