Correlation Between Singapore Telecommunicatio and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and INDOFOOD AGRI 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 INDOFOOD AGRI 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 INDOFOOD AGRI RES, you can compare the effects of market volatilities on Singapore Telecommunicatio and INDOFOOD AGRI 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 INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and INDOFOOD AGRI.
Diversification Opportunities for Singapore Telecommunicatio and INDOFOOD AGRI
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Singapore and INDOFOOD is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES 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 INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and INDOFOOD AGRI
Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to generate 0.73 times more return on investment than INDOFOOD AGRI. However, Singapore Telecommunications Limited is 1.37 times less risky than INDOFOOD AGRI. It trades about 0.04 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.02 per unit of risk. If you would invest 173.00 in Singapore Telecommunications Limited on August 25, 2024 and sell it today you would earn a total of 43.00 from holding Singapore Telecommunications Limited or generate 24.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Singapore Telecommunications L vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Singapore Telecommunicatio |
| INDOFOOD AGRI RES |
Singapore Telecommunicatio and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and INDOFOOD AGRI
The main advantage of trading using opposite Singapore Telecommunicatio and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, INDOFOOD AGRI 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 INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.| Singapore Telecommunicatio vs. SHIN ETSU CHEMICAL | Singapore Telecommunicatio vs. Public Storage | Singapore Telecommunicatio vs. Eastman Chemical | Singapore Telecommunicatio vs. KINGBOARD CHEMICAL |
| INDOFOOD AGRI vs. SBA Communications Corp | INDOFOOD AGRI vs. SK TELECOM TDADR | INDOFOOD AGRI vs. Singapore Telecommunications Limited | INDOFOOD AGRI vs. Shenandoah Telecommunications |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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