Correlation Between Singapore Telecommunicatio and PEPKOR
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and PEPKOR 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 PEPKOR 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 PEPKOR LTD, you can compare the effects of market volatilities on Singapore Telecommunicatio and PEPKOR 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 PEPKOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and PEPKOR.
Diversification Opportunities for Singapore Telecommunicatio and PEPKOR
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Singapore and PEPKOR is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and PEPKOR LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPKOR LTD 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 PEPKOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEPKOR LTD has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and PEPKOR go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and PEPKOR
Assuming the 90 days trading horizon Singapore Telecommunicatio is expected to generate 4.7 times less return on investment than PEPKOR. But when comparing it to its historical volatility, Singapore Telecommunications Limited is 3.36 times less risky than PEPKOR. It trades about 0.1 of its potential returns per unit of risk. PEPKOR LTD is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 58.00 in PEPKOR LTD on November 3, 2024 and sell it today you would earn a total of 70.00 from holding PEPKOR LTD or generate 120.69% 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. PEPKOR LTD
Performance |
| Timeline |
| Singapore Telecommunicatio |
| PEPKOR LTD |
Singapore Telecommunicatio and PEPKOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and PEPKOR
The main advantage of trading using opposite Singapore Telecommunicatio and PEPKOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, PEPKOR 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 PEPKOR will offset losses from the drop in PEPKOR's long position.The idea behind Singapore Telecommunications Limited and PEPKOR LTD 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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