Correlation Between Rogers Communications and PCCW

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

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

Diversification Opportunities for Rogers Communications and PCCW

-0.15

Correlation Coefficient

Rogers Communications  PCCW

Good diversification

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

Pair Corralation between Rogers Communications and PCCW

Considering the 90-day investment horizon Rogers Communications is expected to under-perform the PCCW. But the stock apears to be less risky and, when comparing its historical volatility, Rogers Communications is 3.9 times less risky than PCCW. The stock trades about -0.21 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

Rogers Communications  vs.  PCCW Limited

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Rogers Communications and PCCW

The main advantage of trading using opposite Rogers Communications and PCCW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rogers Communications 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 Rogers Communications 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.