Correlation Between Direct Line and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Direct Line 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 Direct Line and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direct Line Insurance and Singapore Telecommunications Limited, you can compare the effects of market volatilities on Direct Line 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 Direct Line with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and Singapore Telecommunicatio.
Diversification Opportunities for Direct Line and Singapore Telecommunicatio
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direct and Singapore is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and Direct Line 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 Direct Line Insurance 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 Direct Line i.e., Direct Line and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between Direct Line and Singapore Telecommunicatio
Assuming the 90 days trading horizon Direct Line is expected to generate 1.43 times less return on investment than Singapore Telecommunicatio. In addition to that, Direct Line is 1.91 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 0.14 per unit of volatility. If you would invest 165.00 in Singapore Telecommunications Limited on September 3, 2024 and sell it today you would earn a total of 55.00 from holding Singapore Telecommunications Limited or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Line Insurance vs. Singapore Telecommunications L
Performance |
| Timeline |
| Direct Line Insurance |
| Singapore Telecommunicatio |
Direct Line and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and Singapore Telecommunicatio
The main advantage of trading using opposite Direct Line and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line 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.| Direct Line vs. Allianz SE | Direct Line vs. Superior Plus Corp | Direct Line vs. NMI Holdings | Direct Line vs. Origin Agritech |
| Singapore Telecommunicatio vs. T Mobile | Singapore Telecommunicatio vs. China Mobile Limited | Singapore Telecommunicatio vs. ATT Inc | Singapore Telecommunicatio vs. Nippon Telegraph and |
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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