Correlation Between SHIN-ETSU CHEMICAL and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both SHIN-ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIN ETSU CHEMICAL and Singapore Telecommunications Limited, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and Singapore Telecommunicatio.
Diversification Opportunities for SHIN-ETSU CHEMICAL and Singapore Telecommunicatio
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SHIN-ETSU and Singapore is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and SHIN-ETSU CHEMICAL 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 SHIN ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between SHIN-ETSU CHEMICAL and Singapore Telecommunicatio
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to generate 0.98 times more return on investment than Singapore Telecommunicatio. However, SHIN ETSU CHEMICAL is 1.02 times less risky than Singapore Telecommunicatio. It trades about 0.1 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about -0.05 per unit of risk. If you would invest 3,357 in SHIN ETSU CHEMICAL on August 29, 2024 and sell it today you would earn a total of 121.00 from holding SHIN ETSU CHEMICAL or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. Singapore Telecommunications L
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| Singapore Telecommunicatio |
SHIN-ETSU CHEMICAL and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN-ETSU CHEMICAL and Singapore Telecommunicatio
The main advantage of trading using opposite SHIN-ETSU CHEMICAL and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN-ETSU CHEMICAL 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.| SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc | SHIN-ETSU CHEMICAL vs. Apple Inc |
| Singapore Telecommunicatio vs. T Mobile | Singapore Telecommunicatio vs. ATT Inc | Singapore Telecommunicatio vs. Deutsche Telekom AG |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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