Correlation Between London Stock and Singapore Exchange
Can any of the company-specific risk be diversified away by investing in both London Stock 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 London Stock and Singapore Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Stock Exchange and Singapore Exchange Limited, you can compare the effects of market volatilities on London Stock 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 London Stock with a short position of Singapore Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Stock and Singapore Exchange.
Diversification Opportunities for London Stock and Singapore Exchange
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between London and Singapore is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding London Stock Exchange and Singapore Exchange Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Exchange and London Stock 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 London Stock Exchange 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 London Stock i.e., London Stock and Singapore Exchange go up and down completely randomly.
Pair Corralation between London Stock and Singapore Exchange
Assuming the 90 days horizon London Stock is expected to generate 1.94 times less return on investment than Singapore Exchange. But when comparing it to its historical volatility, London Stock Exchange is 2.3 times less risky than Singapore Exchange. It trades about 0.11 of its potential returns per unit of risk. Singapore Exchange Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 842.00 in Singapore Exchange Limited on August 30, 2024 and sell it today you would earn a total of 99.00 from holding Singapore Exchange Limited or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Stock Exchange vs. Singapore Exchange Limited
Performance |
| Timeline |
| London Stock Exchange |
| Singapore Exchange |
London Stock and Singapore Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Stock and Singapore Exchange
The main advantage of trading using opposite London Stock and Singapore Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Stock 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.| London Stock vs. Deutsche Boerse AG | London Stock vs. Hong Kong Exchange | London Stock vs. Japan Exchange Group | London Stock vs. London Stock Exchange |
| Singapore Exchange vs. Hong Kong Exchanges | Singapore Exchange vs. Singapore Exchange Ltd | Singapore Exchange vs. Deutsche Brse AG | Singapore Exchange vs. London Stock Exchange |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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