Correlation Between Singapore Telecommunicatio and China Communications
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and China Communications 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 China Communications 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 China Communications Services, you can compare the effects of market volatilities on Singapore Telecommunicatio and China Communications 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 China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and China Communications.
Diversification Opportunities for Singapore Telecommunicatio and China Communications
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Singapore and China is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications 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 China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and China Communications go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and China Communications
Assuming the 90 days trading horizon Singapore Telecommunicatio is expected to generate 3.58 times less return on investment than China Communications. But when comparing it to its historical volatility, Singapore Telecommunications Limited is 3.62 times less risky than China Communications. It trades about 0.06 of its potential returns per unit of risk. China Communications Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 21.00 in China Communications Services on August 26, 2024 and sell it today you would earn a total of 28.00 from holding China Communications Services or generate 133.33% 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. China Communications Services
Performance |
| Timeline |
| Singapore Telecommunicatio |
| China Communications |
Singapore Telecommunicatio and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and China Communications
The main advantage of trading using opposite Singapore Telecommunicatio and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.| Singapore Telecommunicatio vs. SHIN ETSU CHEMICAL | Singapore Telecommunicatio vs. Public Storage | Singapore Telecommunicatio vs. Eastman Chemical | Singapore Telecommunicatio vs. KINGBOARD CHEMICAL |
| China Communications vs. T Mobile | China Communications vs. ATT Inc | China Communications vs. Deutsche Telekom AG | China Communications vs. Nippon Telegraph and |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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