Correlation Between Tencent Music and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Tencent Music 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 Tencent Music and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tencent Music Entertainment and Singapore Telecommunications Limited, you can compare the effects of market volatilities on Tencent Music 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 Tencent Music with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Singapore Telecommunicatio.
Diversification Opportunities for Tencent Music and Singapore Telecommunicatio
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tencent and Singapore is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and Tencent Music 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 Tencent Music Entertainment 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 Tencent Music i.e., Tencent Music and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between Tencent Music and Singapore Telecommunicatio
Assuming the 90 days trading horizon Tencent Music is expected to generate 1.16 times less return on investment than Singapore Telecommunicatio. In addition to that, Tencent Music is 2.08 times more volatile than Singapore Telecommunications Limited. It trades about 0.05 of its total potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about 0.11 per unit of volatility. If you would invest 153.00 in Singapore Telecommunications Limited on September 1, 2024 and sell it today you would earn a total of 59.00 from holding Singapore Telecommunications Limited or generate 38.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Singapore Telecommunications L
Performance |
| Timeline |
| Tencent Music Entert |
| Singapore Telecommunicatio |
Tencent Music and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Singapore Telecommunicatio
The main advantage of trading using opposite Tencent Music and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music 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.| Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc |
| Singapore Telecommunicatio vs. Monster Beverage Corp | Singapore Telecommunicatio vs. United Breweries Co | Singapore Telecommunicatio vs. ARISTOCRAT LEISURE | Singapore Telecommunicatio vs. ePlay Digital |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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