Correlation Between TELECOM ITALIA and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both TELECOM ITALIA 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 TELECOM ITALIA and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TELECOM ITALIA and Singapore Telecommunications Limited, you can compare the effects of market volatilities on TELECOM ITALIA 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 TELECOM ITALIA with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of TELECOM ITALIA and Singapore Telecommunicatio.
Diversification Opportunities for TELECOM ITALIA and Singapore Telecommunicatio
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TELECOM and Singapore is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding TELECOM ITALIA and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and TELECOM ITALIA 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 TELECOM ITALIA 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 TELECOM ITALIA i.e., TELECOM ITALIA and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between TELECOM ITALIA and Singapore Telecommunicatio
Assuming the 90 days trading horizon TELECOM ITALIA is expected to generate 2.16 times more return on investment than Singapore Telecommunicatio. However, TELECOM ITALIA is 2.16 times more volatile than Singapore Telecommunications Limited. It trades about 0.15 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about 0.26 per unit of risk. If you would invest 24.00 in TELECOM ITALIA on November 3, 2024 and sell it today you would earn a total of 2.00 from holding TELECOM ITALIA or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TELECOM ITALIA vs. Singapore Telecommunications L
Performance |
| Timeline |
| TELECOM ITALIA |
| Singapore Telecommunicatio |
TELECOM ITALIA and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TELECOM ITALIA and Singapore Telecommunicatio
The main advantage of trading using opposite TELECOM ITALIA and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TELECOM ITALIA 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.| TELECOM ITALIA vs. Apple Inc | TELECOM ITALIA vs. Apple Inc | TELECOM ITALIA vs. Apple Inc | TELECOM ITALIA vs. Apple Inc |
| Singapore Telecommunicatio vs. HAVERTY FURNITURE A | Singapore Telecommunicatio vs. bet at home AG | Singapore Telecommunicatio vs. Broadcom | Singapore Telecommunicatio vs. INVITATION HOMES DL |
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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