Correlation Between Keppel and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Keppel 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 Keppel and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keppel Limited and Singapore Telecommunications PK, you can compare the effects of market volatilities on Keppel 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 Keppel with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keppel and Singapore Telecommunicatio.
Diversification Opportunities for Keppel and Singapore Telecommunicatio
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Keppel and Singapore is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Keppel Limited and Singapore Telecommunications P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and Keppel 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 Keppel Limited 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 Keppel i.e., Keppel and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between Keppel and Singapore Telecommunicatio
Assuming the 90 days horizon Keppel Limited is expected to generate 2.76 times more return on investment than Singapore Telecommunicatio. However, Keppel is 2.76 times more volatile than Singapore Telecommunications PK. It trades about 0.06 of its potential returns per unit of risk. Singapore Telecommunications PK is currently generating about 0.08 per unit of risk. If you would invest 597.00 in Keppel Limited on December 10, 2024 and sell it today you would earn a total of 411.00 from holding Keppel Limited or generate 68.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.33% |
| Values | Daily Returns |
Keppel Limited vs. Singapore Telecommunications P
Performance |
| Timeline |
| Keppel Limited |
| Singapore Telecommunicatio |
Keppel and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keppel and Singapore Telecommunicatio
The main advantage of trading using opposite Keppel and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keppel 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.| Keppel vs. Singapore Telecommunications PK | Keppel vs. United Overseas Bank | Keppel vs. DBS Group Holdings | Keppel vs. Power Assets Holdings |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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