Correlation Between ARISTOCRAT LEISURE and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and Singapore Telecommunications Limited, you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and Singapore Telecommunicatio.
Diversification Opportunities for ARISTOCRAT LEISURE and Singapore Telecommunicatio
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ARISTOCRAT and Singapore is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and Singapore Telecommunicatio
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.72 times more return on investment than Singapore Telecommunicatio. However, ARISTOCRAT LEISURE is 1.38 times less risky than Singapore Telecommunicatio. It trades about 0.13 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about 0.07 per unit of risk. If you would invest 2,149 in ARISTOCRAT LEISURE on December 1, 2024 and sell it today you would earn a total of 2,171 from holding ARISTOCRAT LEISURE or generate 101.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. Singapore Telecommunications L
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| Singapore Telecommunicatio |
ARISTOCRAT LEISURE and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and Singapore Telecommunicatio
The main advantage of trading using opposite ARISTOCRAT LEISURE and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.| ARISTOCRAT LEISURE vs. SOGECLAIR SA INH | ARISTOCRAT LEISURE vs. Xinhua Winshare Publishing | ARISTOCRAT LEISURE vs. Perdoceo Education | ARISTOCRAT LEISURE vs. Strategic Education |
| Singapore Telecommunicatio vs. SBA Communications Corp | Singapore Telecommunicatio vs. Titan Machinery | Singapore Telecommunicatio vs. FARM 51 GROUP | Singapore Telecommunicatio vs. Cairo Communication SpA |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |