Correlation Between Singapore Telecommunicatio and INFORMATION SVC
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and INFORMATION SVC 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 INFORMATION SVC 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 INFORMATION SVC GRP, you can compare the effects of market volatilities on Singapore Telecommunicatio and INFORMATION SVC 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 INFORMATION SVC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and INFORMATION SVC.
Diversification Opportunities for Singapore Telecommunicatio and INFORMATION SVC
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Singapore and INFORMATION is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and INFORMATION SVC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INFORMATION SVC GRP 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 INFORMATION SVC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INFORMATION SVC GRP has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and INFORMATION SVC go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and INFORMATION SVC
Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to generate 0.7 times more return on investment than INFORMATION SVC. However, Singapore Telecommunications Limited is 1.42 times less risky than INFORMATION SVC. It trades about 0.04 of its potential returns per unit of risk. INFORMATION SVC GRP is currently generating about 0.01 per unit of risk. If you would invest 163.00 in Singapore Telecommunications Limited on September 13, 2024 and sell it today you would earn a total of 52.00 from holding Singapore Telecommunications Limited or generate 31.9% 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. INFORMATION SVC GRP
Performance |
| Timeline |
| Singapore Telecommunicatio |
| INFORMATION SVC GRP |
Singapore Telecommunicatio and INFORMATION SVC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and INFORMATION SVC
The main advantage of trading using opposite Singapore Telecommunicatio and INFORMATION SVC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, INFORMATION SVC 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 INFORMATION SVC will offset losses from the drop in INFORMATION SVC's long position.The idea behind Singapore Telecommunications Limited and INFORMATION SVC GRP 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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