Correlation Between Automatic Data and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Automatic Data 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 Automatic Data and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and Singapore Telecommunications Limited, you can compare the effects of market volatilities on Automatic Data 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 Automatic Data with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Singapore Telecommunicatio.
Diversification Opportunities for Automatic Data and Singapore Telecommunicatio
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Automatic and Singapore is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and Automatic Data 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 Automatic Data Processing 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 Automatic Data i.e., Automatic Data and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between Automatic Data and Singapore Telecommunicatio
Assuming the 90 days horizon Automatic Data is expected to generate 1.12 times less return on investment than Singapore Telecommunicatio. But when comparing it to its historical volatility, Automatic Data Processing is 1.21 times less risky than Singapore Telecommunicatio. It trades about 0.05 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 163.00 in Singapore Telecommunications Limited on September 13, 2024 and sell it today you would earn a total of 52.00 from holding Singapore Telecommunications Limited or generate 31.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Singapore Telecommunications L
Performance |
| Timeline |
| Automatic Data Processing |
| Singapore Telecommunicatio |
Automatic Data and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Singapore Telecommunicatio
The main advantage of trading using opposite Automatic Data and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data 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.| Automatic Data vs. Paychex | Automatic Data vs. Superior Plus Corp | Automatic Data vs. SIVERS SEMICONDUCTORS AB | Automatic Data vs. NorAm Drilling AS |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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