Correlation Between ATT and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both ATT and Singapore Telecommunicatio 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 ATT and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Singapore Telecommunications Limited, you can compare the effects of market volatilities on ATT and Singapore Telecommunicatio 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 ATT with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Singapore Telecommunicatio.
Diversification Opportunities for ATT and Singapore Telecommunicatio
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ATT and Singapore is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and ATT 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 ATT Inc are associated (or correlated) with Singapore Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Telecommunicatio has no effect on the direction of ATT i.e., ATT and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between ATT and Singapore Telecommunicatio
Given the investment horizon of 90 days ATT Inc is expected to generate 0.85 times more return on investment than Singapore Telecommunicatio. However, ATT Inc is 1.18 times less risky than Singapore Telecommunicatio. It trades about -0.2 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about -0.31 per unit of risk. If you would invest 2,226 in ATT Inc on August 29, 2024 and sell it today you would lose (94.00) from holding ATT Inc or give up 4.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Singapore Telecommunications L
Performance |
| Timeline |
| ATT Inc |
| Singapore Telecommunicatio |
ATT and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Singapore Telecommunicatio
The main advantage of trading using opposite ATT and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Singapore Telecommunicatio 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 Singapore Telecommunicatio will offset losses from the drop in Singapore Telecommunicatio's long position.The idea behind ATT Inc and Singapore Telecommunications Limited 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.| Singapore Telecommunicatio vs. Airtel Africa Plc | Singapore Telecommunicatio vs. KDDI Corp | Singapore Telecommunicatio vs. Amrica Mvil, SAB | Singapore Telecommunicatio vs. Turk Telekomunikasyon AS |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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