Correlation Between MTI WIRELESS and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both MTI WIRELESS 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 MTI WIRELESS and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTI WIRELESS EDGE and Singapore Telecommunications Limited, you can compare the effects of market volatilities on MTI WIRELESS 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 MTI WIRELESS with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI WIRELESS and Singapore Telecommunicatio.
Diversification Opportunities for MTI WIRELESS and Singapore Telecommunicatio
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MTI and Singapore is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MTI WIRELESS EDGE and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and MTI WIRELESS 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 MTI WIRELESS EDGE 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 MTI WIRELESS i.e., MTI WIRELESS and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between MTI WIRELESS and Singapore Telecommunicatio
Assuming the 90 days horizon MTI WIRELESS EDGE is expected to under-perform the Singapore Telecommunicatio. In addition to that, MTI WIRELESS is 1.39 times more volatile than Singapore Telecommunications Limited. It trades about -0.18 of its total potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about -0.03 per unit of volatility. If you would invest 218.00 in Singapore Telecommunications Limited on August 27, 2024 and sell it today you would lose (3.00) from holding Singapore Telecommunications Limited or give up 1.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTI WIRELESS EDGE vs. Singapore Telecommunications L
Performance |
| Timeline |
| MTI WIRELESS EDGE |
| Singapore Telecommunicatio |
MTI WIRELESS and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI WIRELESS and Singapore Telecommunicatio
The main advantage of trading using opposite MTI WIRELESS and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI WIRELESS 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.| MTI WIRELESS vs. NORTHEAST UTILITIES | MTI WIRELESS vs. SK TELECOM TDADR | MTI WIRELESS vs. MAVEN WIRELESS SWEDEN | MTI WIRELESS vs. DiamondRock Hospitality |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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