Correlation Between Singapore Telecommunicatio and VULCAN MATERIALS
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS, you can compare the effects of market volatilities on Singapore Telecommunicatio and VULCAN MATERIALS 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 VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and VULCAN MATERIALS.
Diversification Opportunities for Singapore Telecommunicatio and VULCAN MATERIALS
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Singapore and VULCAN is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS 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 VULCAN MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VULCAN MATERIALS has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and VULCAN MATERIALS go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and VULCAN MATERIALS
Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to generate 0.9 times more return on investment than VULCAN MATERIALS. However, Singapore Telecommunications Limited is 1.11 times less risky than VULCAN MATERIALS. It trades about 0.14 of its potential returns per unit of risk. VULCAN MATERIALS is currently generating about 0.07 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Telecommunications L vs. VULCAN MATERIALS
Performance |
| Timeline |
| Singapore Telecommunicatio |
| VULCAN MATERIALS |
Singapore Telecommunicatio and VULCAN MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and VULCAN MATERIALS
The main advantage of trading using opposite Singapore Telecommunicatio and VULCAN MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, VULCAN MATERIALS 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 VULCAN MATERIALS will offset losses from the drop in VULCAN MATERIALS'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 |
| VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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