Correlation Between Singapore Telecommunicatio and LGI Homes
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and LGI Homes 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 LGI Homes 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 LGI Homes, you can compare the effects of market volatilities on Singapore Telecommunicatio and LGI Homes 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 LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and LGI Homes.
Diversification Opportunities for Singapore Telecommunicatio and LGI Homes
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Singapore and LGI is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes 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 LGI Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGI Homes has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and LGI Homes go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and LGI Homes
Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to generate 0.57 times more return on investment than LGI Homes. However, Singapore Telecommunications Limited is 1.76 times less risky than LGI Homes. It trades about 0.04 of its potential returns per unit of risk. LGI Homes is currently generating about 0.02 per unit of risk. If you would invest 165.00 in Singapore Telecommunications Limited on September 2, 2024 and sell it today you would earn a total of 55.00 from holding Singapore Telecommunications Limited or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Telecommunications L vs. LGI Homes
Performance |
| Timeline |
| Singapore Telecommunicatio |
| LGI Homes |
Singapore Telecommunicatio and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and LGI Homes
The main advantage of trading using opposite Singapore Telecommunicatio and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, LGI Homes 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 LGI Homes will offset losses from the drop in LGI Homes' long position.| Singapore Telecommunicatio vs. LGI Homes | Singapore Telecommunicatio vs. DATAGROUP SE | Singapore Telecommunicatio vs. Science Applications International | Singapore Telecommunicatio vs. HomeToGo SE |
| LGI Homes vs. Singapore Telecommunications Limited | LGI Homes vs. HYDROFARM HLD GRP | LGI Homes vs. Sumitomo Mitsui Construction | LGI Homes vs. Chongqing Machinery Electric |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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