Correlation Between Singapore Telecommunicatio and Westinghouse Air

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Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and Westinghouse Air 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 Westinghouse Air 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 Westinghouse Air Brake, you can compare the effects of market volatilities on Singapore Telecommunicatio and Westinghouse Air 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 Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and Westinghouse Air.

Diversification Opportunities for Singapore Telecommunicatio and Westinghouse Air

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Singapore and Westinghouse is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake 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 Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and Westinghouse Air go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and Westinghouse Air

Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to generate 1.21 times more return on investment than Westinghouse Air. However, Singapore Telecommunicatio is 1.21 times more volatile than Westinghouse Air Brake. It trades about 0.13 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.1 per unit of risk. If you would invest  161.00  in Singapore Telecommunications Limited on August 25, 2024 and sell it today you would earn a total of  55.00  from holding Singapore Telecommunications Limited or generate 34.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Singapore Telecommunications L  vs.  Westinghouse Air Brake

 Performance 
       Timeline  
Singapore Telecommunicatio 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Telecommunications Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Singapore Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Westinghouse Air Brake 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Westinghouse Air Brake are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Westinghouse Air reported solid returns over the last few months and may actually be approaching a breakup point.

Singapore Telecommunicatio and Westinghouse Air Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Singapore Telecommunicatio and Westinghouse Air

The main advantage of trading using opposite Singapore Telecommunicatio and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, Westinghouse Air 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 Westinghouse Air will offset losses from the drop in Westinghouse Air's long position.
The idea behind Singapore Telecommunications Limited and Westinghouse Air Brake 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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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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