Correlation Between Dassault Systmes and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Dassault Systmes 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 Dassault Systmes and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dassault Systmes SE and Singapore Telecommunications Limited, you can compare the effects of market volatilities on Dassault Systmes 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 Dassault Systmes with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Systmes and Singapore Telecommunicatio.
Diversification Opportunities for Dassault Systmes and Singapore Telecommunicatio
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dassault and Singapore is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systmes SE and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and Dassault Systmes 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 Dassault Systmes SE 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 Dassault Systmes i.e., Dassault Systmes and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between Dassault Systmes and Singapore Telecommunicatio
Assuming the 90 days horizon Dassault Systmes SE is expected to generate 0.74 times more return on investment than Singapore Telecommunicatio. However, Dassault Systmes SE is 1.35 times less risky than Singapore Telecommunicatio. It trades about 0.22 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about 0.02 per unit of risk. If you would invest 3,220 in Dassault Systmes SE on September 13, 2024 and sell it today you would earn a total of 240.00 from holding Dassault Systmes SE or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dassault Systmes SE vs. Singapore Telecommunications L
Performance |
| Timeline |
| Dassault Systmes |
| Singapore Telecommunicatio |
Dassault Systmes and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dassault Systmes and Singapore Telecommunicatio
The main advantage of trading using opposite Dassault Systmes and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Systmes 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.| Dassault Systmes vs. National Bank Holdings | Dassault Systmes vs. SINGAPORE AIRLINES | Dassault Systmes vs. CHIBA BANK | Dassault Systmes vs. Chiba Bank |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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