Correlation Between Singapore Telecommunicatio and Commercial Vehicle
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and Commercial Vehicle 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 Commercial Vehicle 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 Commercial Vehicle Group, you can compare the effects of market volatilities on Singapore Telecommunicatio and Commercial Vehicle 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 Commercial Vehicle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and Commercial Vehicle.
Diversification Opportunities for Singapore Telecommunicatio and Commercial Vehicle
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Singapore and Commercial is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle 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 Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and Commercial Vehicle go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and Commercial Vehicle
Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to generate 0.49 times more return on investment than Commercial Vehicle. However, Singapore Telecommunications Limited is 2.05 times less risky than Commercial Vehicle. It trades about 0.14 of its potential returns per unit of risk. Commercial Vehicle Group is currently generating about -0.16 per unit of risk. If you would invest 162.00 in Singapore Telecommunications Limited on September 1, 2024 and sell it today you would earn a total of 58.00 from holding Singapore Telecommunications Limited or generate 35.8% 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. Commercial Vehicle Group
Performance |
| Timeline |
| Singapore Telecommunicatio |
| Commercial Vehicle |
Singapore Telecommunicatio and Commercial Vehicle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and Commercial Vehicle
The main advantage of trading using opposite Singapore Telecommunicatio and Commercial Vehicle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, Commercial Vehicle 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 Commercial Vehicle will offset losses from the drop in Commercial Vehicle's long position.| Singapore Telecommunicatio vs. Monster Beverage Corp | Singapore Telecommunicatio vs. United Breweries Co | Singapore Telecommunicatio vs. ARISTOCRAT LEISURE | Singapore Telecommunicatio vs. ePlay Digital |
| Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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