Correlation Between SINGAPORE EXUNSPADR/15 and JAPAN EX
Can any of the company-specific risk be diversified away by investing in both SINGAPORE EXUNSPADR/15 and JAPAN EX 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 EXUNSPADR/15 and JAPAN EX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE EXUNSPADR15 and JAPAN EX UNADR, you can compare the effects of market volatilities on SINGAPORE EXUNSPADR/15 and JAPAN EX 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 EXUNSPADR/15 with a short position of JAPAN EX. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE EXUNSPADR/15 and JAPAN EX.
Diversification Opportunities for SINGAPORE EXUNSPADR/15 and JAPAN EX
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SINGAPORE and JAPAN is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE EXUNSPADR15 and JAPAN EX UNADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN EX UNADR and SINGAPORE EXUNSPADR/15 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 EXUNSPADR15 are associated (or correlated) with JAPAN EX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN EX UNADR has no effect on the direction of SINGAPORE EXUNSPADR/15 i.e., SINGAPORE EXUNSPADR/15 and JAPAN EX go up and down completely randomly.
Pair Corralation between SINGAPORE EXUNSPADR/15 and JAPAN EX
Assuming the 90 days trading horizon SINGAPORE EXUNSPADR15 is expected to generate 0.88 times more return on investment than JAPAN EX. However, SINGAPORE EXUNSPADR15 is 1.14 times less risky than JAPAN EX. It trades about 0.1 of its potential returns per unit of risk. JAPAN EX UNADR is currently generating about 0.07 per unit of risk. If you would invest 834.00 in SINGAPORE EXUNSPADR15 on November 2, 2024 and sell it today you would earn a total of 806.00 from holding SINGAPORE EXUNSPADR15 or generate 96.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
SINGAPORE EXUNSPADR15 vs. JAPAN EX UNADR
Performance |
| Timeline |
| SINGAPORE EXUNSPADR/15 |
| JAPAN EX UNADR |
SINGAPORE EXUNSPADR/15 and JAPAN EX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE EXUNSPADR/15 and JAPAN EX
The main advantage of trading using opposite SINGAPORE EXUNSPADR/15 and JAPAN EX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE EXUNSPADR/15 position performs unexpectedly, JAPAN EX 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 JAPAN EX will offset losses from the drop in JAPAN EX's long position.| SINGAPORE EXUNSPADR/15 vs. LONDON STEXUNSPADRS12 | SINGAPORE EXUNSPADR/15 vs. Nasdaq Inc | SINGAPORE EXUNSPADR/15 vs. Cboe Global Markets | SINGAPORE EXUNSPADR/15 vs. ASX LTD UNSPONSADR |
| JAPAN EX vs. Inspire Medical Systems | JAPAN EX vs. Yanzhou Coal Mining | JAPAN EX vs. Advanced Medical Solutions | JAPAN EX vs. Avanos Medical |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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