Correlation Between Hong Kong and Singapore Exchange
Can any of the company-specific risk be diversified away by investing in both Hong Kong 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 Hong Kong and Singapore Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong Exchanges and Singapore Exchange Ltd, you can compare the effects of market volatilities on Hong Kong 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 Hong Kong with a short position of Singapore Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Singapore Exchange.
Diversification Opportunities for Hong Kong and Singapore Exchange
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hong and Singapore is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Exchanges and Singapore Exchange Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Exchange and Hong Kong 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 Hong Kong Exchanges 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 Hong Kong i.e., Hong Kong and Singapore Exchange go up and down completely randomly.
Pair Corralation between Hong Kong and Singapore Exchange
Assuming the 90 days horizon Hong Kong is expected to generate 74.04 times less return on investment than Singapore Exchange. But when comparing it to its historical volatility, Hong Kong Exchanges is 17.61 times less risky than Singapore Exchange. It trades about 0.02 of its potential returns per unit of risk. Singapore Exchange Ltd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,174 in Singapore Exchange Ltd on August 27, 2024 and sell it today you would earn a total of 723.00 from holding Singapore Exchange Ltd or generate 61.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.62% |
| Values | Daily Returns |
Hong Kong Exchanges vs. Singapore Exchange Ltd
Performance |
| Timeline |
| Hong Kong Exchanges |
| Singapore Exchange |
Hong Kong and Singapore Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Singapore Exchange
The main advantage of trading using opposite Hong Kong and Singapore Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong 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.| Hong Kong vs. Singapore Exchange Limited | Hong Kong vs. London Stock Exchange | Hong Kong vs. MSCI Inc | Hong Kong vs. London Stock Exchange |
| Singapore Exchange vs. Hong Kong Exchanges | Singapore Exchange vs. Deutsche Boerse AG | Singapore Exchange vs. SP Global | Singapore Exchange vs. Moodys |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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