Correlation Between Commonwealth Bank and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank 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 Commonwealth Bank and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank of and Singapore Telecommunications Limited, you can compare the effects of market volatilities on Commonwealth Bank 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 Commonwealth Bank with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Singapore Telecommunicatio.
Diversification Opportunities for Commonwealth Bank and Singapore Telecommunicatio
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Commonwealth and Singapore is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and Commonwealth Bank 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 Commonwealth Bank of 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 Commonwealth Bank i.e., Commonwealth Bank and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Singapore Telecommunicatio
Assuming the 90 days horizon Commonwealth Bank of is expected to generate 0.89 times more return on investment than Singapore Telecommunicatio. However, Commonwealth Bank of is 1.12 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 0.06 per unit of risk. If you would invest 9,241 in Commonwealth Bank of on October 30, 2024 and sell it today you would earn a total of 270.00 from holding Commonwealth Bank of or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Singapore Telecommunications L
Performance |
| Timeline |
| Commonwealth Bank |
| Singapore Telecommunicatio |
Commonwealth Bank and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Singapore Telecommunicatio
The main advantage of trading using opposite Commonwealth Bank and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank 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.| Commonwealth Bank vs. JD SPORTS FASH | Commonwealth Bank vs. Gaztransport Technigaz SA | Commonwealth Bank vs. HAVERTY FURNITURE A | Commonwealth Bank vs. OFFICE DEPOT |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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