Correlation Between Knowles and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Knowles and Singapore 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 Knowles and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knowles and Singapore Telecommunications Limited, you can compare the effects of market volatilities on Knowles and Singapore 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 Knowles with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knowles and Singapore Telecommunicatio.
Diversification Opportunities for Knowles and Singapore Telecommunicatio
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Knowles and Singapore is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Knowles and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and Knowles 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 Knowles are associated (or correlated) with Singapore Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Telecommunicatio has no effect on the direction of Knowles i.e., Knowles and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between Knowles and Singapore Telecommunicatio
Assuming the 90 days horizon Knowles is expected to generate 1.26 times more return on investment than Singapore Telecommunicatio. However, Knowles is 1.26 times more volatile than Singapore Telecommunications Limited. It trades about 0.16 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about -0.01 per unit of risk. If you would invest 1,610 in Knowles on September 13, 2024 and sell it today you would earn a total of 240.00 from holding Knowles or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knowles vs. Singapore Telecommunications L
Performance |
| Timeline |
| Knowles |
| Singapore Telecommunicatio |
Knowles and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knowles and Singapore Telecommunicatio
The main advantage of trading using opposite Knowles and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knowles position performs unexpectedly, Singapore 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 Singapore Telecommunicatio will offset losses from the drop in Singapore Telecommunicatio's long position.| Knowles vs. URBAN OUTFITTERS | Knowles vs. Corporate Office Properties | Knowles vs. American Homes 4 | Knowles vs. Fair Isaac Corp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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