Correlation Between XL Axiata and WideOpenWest

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

By analyzing existing cross correlation between XL Axiata Tbk and WideOpenWest, you can compare the effects of market volatilities on XL Axiata and WideOpenWest 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 XL Axiata with a short position of WideOpenWest. Check out your portfolio center. Please also check ongoing floating volatility patterns of XL Axiata and WideOpenWest.

Diversification Opportunities for XL Axiata and WideOpenWest

-0.04

Correlation Coefficient

XL Axiata  WideOpenWest

Good diversification

The 3 months correlation between PTXKY and WideOpenWest is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding XL Axiata Tbk and WideOpenWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WideOpenWest and XL Axiata 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 XL Axiata Tbk are associated (or correlated) with WideOpenWest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WideOpenWest has no effect on the direction of XL Axiata i.e., XL Axiata and WideOpenWest go up and down completely randomly.

Pair Corralation between XL Axiata and WideOpenWest

Assuming the 90 days horizon XL Axiata Tbk is expected to generate 2.21 times more return on investment than WideOpenWest. However, XL Axiata is 2.21 times more volatile than WideOpenWest. It trades about 0.03 of its potential returns per unit of risk. WideOpenWest is currently generating about -0.03 per unit of risk. If you would invest  318.00  in XL Axiata Tbk on September 12, 2024 and sell it today you would earn a total of  4.00  from holding XL Axiata Tbk or generate 1.26% return on investment over 90 days.

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

XL Axiata Tbk  vs.  WideOpenWest

XL Axiata Tbk

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in XL Axiata Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, XL Axiata may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WideOpenWest

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days WideOpenWest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, WideOpenWest is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with XL Axiata and WideOpenWest

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

The idea behind XL Axiata Tbk and WideOpenWest 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 Commodity Directory module to find actively traded commodities issued by global exchanges.