Correlation Between Singapore Telecommunicatio and XL Axiata
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and XL Axiata 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 XL Axiata 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 XL Axiata Tbk, you can compare the effects of market volatilities on Singapore Telecommunicatio and XL Axiata 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 XL Axiata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and XL Axiata.
Diversification Opportunities for Singapore Telecommunicatio and XL Axiata
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Singapore and PTXKY is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and XL Axiata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Axiata Tbk 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 XL Axiata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Axiata Tbk has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and XL Axiata go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and XL Axiata
Assuming the 90 days horizon Singapore Telecommunications Limited is expected to generate 1.52 times more return on investment than XL Axiata. However, Singapore Telecommunicatio is 1.52 times more volatile than XL Axiata Tbk. It trades about 0.04 of its potential returns per unit of risk. XL Axiata Tbk is currently generating about 0.02 per unit of risk. If you would invest 192.00 in Singapore Telecommunications Limited on August 30, 2024 and sell it today you would earn a total of 31.00 from holding Singapore Telecommunications Limited or generate 16.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 75.66% |
| Values | Daily Returns |
Singapore Telecommunications L vs. XL Axiata Tbk
Performance |
| Timeline |
| Singapore Telecommunicatio |
| XL Axiata Tbk |
Singapore Telecommunicatio and XL Axiata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and XL Axiata
The main advantage of trading using opposite Singapore Telecommunicatio and XL Axiata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, XL Axiata 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 XL Axiata will offset losses from the drop in XL Axiata's long position.| Singapore Telecommunicatio vs. Airtel Africa Plc | Singapore Telecommunicatio vs. KDDI Corp | Singapore Telecommunicatio vs. Amrica Mvil, SAB | Singapore Telecommunicatio vs. Turk Telekomunikasyon AS |
| XL Axiata vs. MTN Group Ltd | XL Axiata vs. Vodacom Group Ltd | XL Axiata vs. Telenor ASA ADR | XL Axiata vs. KT Corporation |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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