Correlation Between Singapore Telecommunicatio and China Datang
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and China Datang 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 Datang 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 Datang, you can compare the effects of market volatilities on Singapore Telecommunicatio and China Datang 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 Datang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and China Datang.
Diversification Opportunities for Singapore Telecommunicatio and China Datang
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Singapore and China is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and China Datang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Datang 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 Datang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Datang has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and China Datang go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and China Datang
Assuming the 90 days trading horizon Singapore Telecommunicatio is expected to generate 5.09 times less return on investment than China Datang. But when comparing it to its historical volatility, Singapore Telecommunications Limited is 1.01 times less risky than China Datang. It trades about 0.02 of its potential returns per unit of risk. China Datang is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 23.00 in China Datang on September 13, 2024 and sell it today you would earn a total of 1.00 from holding China Datang or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Telecommunications L vs. China Datang
Performance |
| Timeline |
| Singapore Telecommunicatio |
| China Datang |
Singapore Telecommunicatio and China Datang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and China Datang
The main advantage of trading using opposite Singapore Telecommunicatio and China Datang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, China Datang 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 Datang will offset losses from the drop in China Datang's long position.The idea behind Singapore Telecommunications Limited and China Datang 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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