Correlation Between CME and Singapore Exchange
Can any of the company-specific risk be diversified away by investing in both CME and Singapore Exchange 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 CME and Singapore Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CME Group and Singapore Exchange Limited, you can compare the effects of market volatilities on CME and Singapore Exchange 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 CME with a short position of Singapore Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of CME and Singapore Exchange.
Diversification Opportunities for CME and Singapore Exchange
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CME and Singapore is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CME Group and Singapore Exchange Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Exchange and CME 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 CME Group are associated (or correlated) with Singapore Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Exchange has no effect on the direction of CME i.e., CME and Singapore Exchange go up and down completely randomly.
Pair Corralation between CME and Singapore Exchange
Considering the 90-day investment horizon CME is expected to generate 1.26 times less return on investment than Singapore Exchange. But when comparing it to its historical volatility, CME Group is 1.89 times less risky than Singapore Exchange. It trades about 0.08 of its potential returns per unit of risk. Singapore Exchange Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 690.00 in Singapore Exchange Limited on August 31, 2024 and sell it today you would earn a total of 235.00 from holding Singapore Exchange Limited or generate 34.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 87.97% |
| Values | Daily Returns |
CME Group vs. Singapore Exchange Limited
Performance |
| Timeline |
| CME Group |
| Singapore Exchange |
CME and Singapore Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CME and Singapore Exchange
The main advantage of trading using opposite CME and Singapore Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CME position performs unexpectedly, Singapore Exchange 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 Exchange will offset losses from the drop in Singapore Exchange's long position.The idea behind CME Group and Singapore Exchange 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.| Singapore Exchange vs. Hong Kong Exchanges | Singapore Exchange vs. Singapore Exchange Ltd | Singapore Exchange vs. Deutsche Brse AG | Singapore Exchange vs. London Stock Exchange |
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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