Correlation Between Singapore Telecommunicatio and Allianz SE
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and Allianz SE 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 Allianz SE 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 Allianz SE VNA, you can compare the effects of market volatilities on Singapore Telecommunicatio and Allianz SE 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 Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and Allianz SE.
Diversification Opportunities for Singapore Telecommunicatio and Allianz SE
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Singapore and Allianz is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and Allianz SE VNA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE VNA 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 Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE VNA has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and Allianz SE go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and Allianz SE
Assuming the 90 days trading horizon Singapore Telecommunicatio is expected to generate 6.99 times less return on investment than Allianz SE. In addition to that, Singapore Telecommunicatio is 2.4 times more volatile than Allianz SE VNA. It trades about 0.02 of its total potential returns per unit of risk. Allianz SE VNA is currently generating about 0.34 per unit of volatility. If you would invest 28,290 in Allianz SE VNA on September 13, 2024 and sell it today you would earn a total of 1,870 from holding Allianz SE VNA or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Telecommunications L vs. Allianz SE VNA
Performance |
| Timeline |
| Singapore Telecommunicatio |
| Allianz SE VNA |
Singapore Telecommunicatio and Allianz SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and Allianz SE
The main advantage of trading using opposite Singapore Telecommunicatio and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, Allianz SE 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 Allianz SE will offset losses from the drop in Allianz SE's long position.The idea behind Singapore Telecommunications Limited and Allianz SE VNA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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