Correlation Between Singapore Telecommunicatio and Keppel
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and Keppel 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 Keppel 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 Keppel Limited, you can compare the effects of market volatilities on Singapore Telecommunicatio and Keppel 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 Keppel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and Keppel.
Diversification Opportunities for Singapore Telecommunicatio and Keppel
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Singapore and Keppel is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications P and Keppel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keppel Limited 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 Keppel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keppel Limited has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and Keppel go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and Keppel
Assuming the 90 days horizon Singapore Telecommunications PK is expected to under-perform the Keppel. But the pink sheet apears to be less risky and, when comparing its historical volatility, Singapore Telecommunications PK is 2.41 times less risky than Keppel. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Keppel Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 990.00 in Keppel Limited on September 21, 2024 and sell it today you would earn a total of 25.00 from holding Keppel Limited or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Telecommunications P vs. Keppel Limited
Performance |
| Timeline |
| Singapore Telecommunicatio |
| Keppel Limited |
Singapore Telecommunicatio and Keppel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and Keppel
The main advantage of trading using opposite Singapore Telecommunicatio and Keppel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, Keppel 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 Keppel will offset losses from the drop in Keppel's long position.The idea behind Singapore Telecommunications PK and Keppel Limited 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.
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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