Correlation Between Singapore Telecommunicatio and Power Assets
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and Power Assets 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 Singapore Telecommunicatio and Power Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Telecommunications PK and Power Assets Holdings, you can compare the effects of market volatilities on Singapore Telecommunicatio and Power Assets 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 Singapore Telecommunicatio with a short position of Power Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and Power Assets.
Diversification Opportunities for Singapore Telecommunicatio and Power Assets
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Singapore and Power is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications P and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings and Singapore Telecommunicatio 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 Singapore Telecommunications PK are associated (or correlated) with Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and Power Assets go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and Power Assets
Assuming the 90 days horizon Singapore Telecommunications PK is expected to generate 0.56 times more return on investment than Power Assets. However, Singapore Telecommunications PK is 1.79 times less risky than Power Assets. It trades about 0.08 of its potential returns per unit of risk. Power Assets Holdings is currently generating about 0.04 per unit of risk. If you would invest 1,628 in Singapore Telecommunications PK on November 19, 2024 and sell it today you would earn a total of 875.00 from holding Singapore Telecommunications PK or generate 53.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.16% |
| Values | Daily Returns |
Singapore Telecommunications P vs. Power Assets Holdings
Performance |
| Timeline |
| Singapore Telecommunicatio |
| Power Assets Holdings |
Singapore Telecommunicatio and Power Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and Power Assets
The main advantage of trading using opposite Singapore Telecommunicatio and Power Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, Power Assets 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 Power Assets will offset losses from the drop in Power Assets' long position.The idea behind Singapore Telecommunications PK and Power Assets Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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