Correlation Between Singapore Exchange and London Stock
Can any of the company-specific risk be diversified away by investing in both Singapore Exchange and London Stock 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 Exchange and London Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Exchange Limited and London Stock Exchange, you can compare the effects of market volatilities on Singapore Exchange and London Stock 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 Exchange with a short position of London Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Exchange and London Stock.
Diversification Opportunities for Singapore Exchange and London Stock
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Singapore and London is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Exchange Limited and London Stock Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Stock Exchange and Singapore Exchange 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 Exchange Limited are associated (or correlated) with London Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Stock Exchange has no effect on the direction of Singapore Exchange i.e., Singapore Exchange and London Stock go up and down completely randomly.
Pair Corralation between Singapore Exchange and London Stock
Assuming the 90 days horizon Singapore Exchange Limited is expected to generate 1.57 times more return on investment than London Stock. However, Singapore Exchange is 1.57 times more volatile than London Stock Exchange. It trades about 0.28 of its potential returns per unit of risk. London Stock Exchange is currently generating about 0.14 per unit of risk. If you would invest 843.00 in Singapore Exchange Limited on August 30, 2024 and sell it today you would earn a total of 98.00 from holding Singapore Exchange Limited or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Exchange Limited vs. London Stock Exchange
Performance |
| Timeline |
| Singapore Exchange |
| London Stock Exchange |
Singapore Exchange and London Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Exchange and London Stock
The main advantage of trading using opposite Singapore Exchange and London Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Exchange position performs unexpectedly, London Stock 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 London Stock will offset losses from the drop in London Stock's long position.| Singapore Exchange vs. Hong Kong Exchanges | Singapore Exchange vs. Singapore Exchange Ltd | Singapore Exchange vs. Deutsche Brse AG | Singapore Exchange vs. London Stock Exchange |
| London Stock vs. TMX Group Limited | London Stock vs. Otc Markets Group | London Stock vs. Morningstar | London Stock vs. CME Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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