Correlation Between Singapore Telecommunicatio and TELECOM ITALIA
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and TELECOM ITALIA 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 TELECOM ITALIA 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 TELECOM ITALIA, you can compare the effects of market volatilities on Singapore Telecommunicatio and TELECOM ITALIA 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 TELECOM ITALIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and TELECOM ITALIA.
Diversification Opportunities for Singapore Telecommunicatio and TELECOM ITALIA
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Singapore and TELECOM is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and TELECOM ITALIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELECOM ITALIA 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 TELECOM ITALIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELECOM ITALIA has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and TELECOM ITALIA go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and TELECOM ITALIA
Assuming the 90 days trading horizon Singapore Telecommunicatio is expected to generate 1.2 times less return on investment than TELECOM ITALIA. But when comparing it to its historical volatility, Singapore Telecommunications Limited is 2.16 times less risky than TELECOM ITALIA. It trades about 0.26 of its potential returns per unit of risk. TELECOM ITALIA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 24.00 in TELECOM ITALIA on November 3, 2024 and sell it today you would earn a total of 2.00 from holding TELECOM ITALIA or generate 8.33% 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. TELECOM ITALIA
Performance |
| Timeline |
| Singapore Telecommunicatio |
| TELECOM ITALIA |
Singapore Telecommunicatio and TELECOM ITALIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and TELECOM ITALIA
The main advantage of trading using opposite Singapore Telecommunicatio and TELECOM ITALIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, TELECOM ITALIA 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 TELECOM ITALIA will offset losses from the drop in TELECOM ITALIA's long position.| Singapore Telecommunicatio vs. HAVERTY FURNITURE A | Singapore Telecommunicatio vs. bet at home AG | Singapore Telecommunicatio vs. Broadcom | Singapore Telecommunicatio vs. INVITATION HOMES DL |
| TELECOM ITALIA vs. Apple Inc | TELECOM ITALIA vs. Apple Inc | TELECOM ITALIA vs. Apple Inc | TELECOM ITALIA 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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