Correlation Between Singapore Telecommunicatio and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and Aedas Homes 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 Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Telecommunications Limited and Aedas Homes SA, you can compare the effects of market volatilities on Singapore Telecommunicatio and Aedas Homes 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 Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and Aedas Homes.
Diversification Opportunities for Singapore Telecommunicatio and Aedas Homes
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Singapore and Aedas is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA 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 Limited are associated (or correlated) with Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and Aedas Homes go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and Aedas Homes
Assuming the 90 days trading horizon Singapore Telecommunicatio is expected to generate 1.75 times less return on investment than Aedas Homes. But when comparing it to its historical volatility, Singapore Telecommunications Limited is 1.23 times less risky than Aedas Homes. It trades about 0.1 of its potential returns per unit of risk. Aedas Homes SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,515 in Aedas Homes SA on November 8, 2024 and sell it today you would earn a total of 1,445 from holding Aedas Homes SA or generate 95.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Telecommunications L vs. Aedas Homes SA
Performance |
| Timeline |
| Singapore Telecommunicatio |
| Aedas Homes SA |
Singapore Telecommunicatio and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and Aedas Homes
The main advantage of trading using opposite Singapore Telecommunicatio and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| Singapore Telecommunicatio vs. Columbia Sportswear | Singapore Telecommunicatio vs. American Homes 4 | Singapore Telecommunicatio vs. ADDUS HOMECARE | Singapore Telecommunicatio vs. Fukuyama Transporting Co |
| Aedas Homes vs. SAN MIGUEL BREWERY | Aedas Homes vs. Cellnex Telecom SA | Aedas Homes vs. HUTCHISON TELECOMM | Aedas Homes vs. Ribbon Communications |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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