Correlation Between Singapore Telecommunicatio and CITIC
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and CITIC 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 CITIC 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 CITIC Limited, you can compare the effects of market volatilities on Singapore Telecommunicatio and CITIC 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 CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and CITIC.
Diversification Opportunities for Singapore Telecommunicatio and CITIC
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Singapore and CITIC is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and CITIC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC 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 Limited are associated (or correlated) with CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Limited has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and CITIC go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and CITIC
Assuming the 90 days trading horizon Singapore Telecommunicatio is expected to generate 2.21 times less return on investment than CITIC. In addition to that, Singapore Telecommunicatio is 1.1 times more volatile than CITIC Limited. It trades about 0.09 of its total potential returns per unit of risk. CITIC Limited is currently generating about 0.23 per unit of volatility. If you would invest 107.00 in CITIC Limited on November 27, 2024 and sell it today you would earn a total of 8.00 from holding CITIC Limited or generate 7.48% 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 L vs. CITIC Limited
Performance |
| Timeline |
| Singapore Telecommunicatio |
| CITIC Limited |
Singapore Telecommunicatio and CITIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and CITIC
The main advantage of trading using opposite Singapore Telecommunicatio and CITIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, CITIC 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 CITIC will offset losses from the drop in CITIC's long position.The idea behind Singapore Telecommunications Limited and CITIC 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.
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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