Correlation Between Singapore Telecommunicatio and TPG Telecom
Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and TPG Telecom 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 TPG Telecom 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 TPG Telecom Limited, you can compare the effects of market volatilities on Singapore Telecommunicatio and TPG Telecom 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 TPG Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and TPG Telecom.
Diversification Opportunities for Singapore Telecommunicatio and TPG Telecom
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Singapore and TPG is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and TPG Telecom Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Telecom Limited 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 TPG Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Telecom Limited has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and TPG Telecom go up and down completely randomly.
Pair Corralation between Singapore Telecommunicatio and TPG Telecom
Assuming the 90 days horizon Singapore Telecommunications Limited is expected to generate 12.59 times more return on investment than TPG Telecom. However, Singapore Telecommunicatio is 12.59 times more volatile than TPG Telecom Limited. It trades about 0.06 of its potential returns per unit of risk. TPG Telecom Limited is currently generating about 0.11 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 50.00 from holding Singapore Telecommunications Limited or generate 28.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.29% |
| Values | Daily Returns |
Singapore Telecommunications L vs. TPG Telecom Limited
Performance |
| Timeline |
| Singapore Telecommunicatio |
| TPG Telecom Limited |
Singapore Telecommunicatio and TPG Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Telecommunicatio and TPG Telecom
The main advantage of trading using opposite Singapore Telecommunicatio and TPG Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Telecommunicatio position performs unexpectedly, TPG Telecom 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 TPG Telecom will offset losses from the drop in TPG Telecom'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 |
| TPG Telecom vs. Vodafone Group PLC | TPG Telecom vs. KDDI Corp | TPG Telecom vs. Amrica Mvil, SAB | TPG Telecom vs. Singapore Telecommunications Limited |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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