Correlation Between TelstraLimited and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both TelstraLimited 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 TelstraLimited and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telstra Limited and Singapore Telecommunications Limited, you can compare the effects of market volatilities on TelstraLimited 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 TelstraLimited with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of TelstraLimited and Singapore Telecommunicatio.
Diversification Opportunities for TelstraLimited and Singapore Telecommunicatio
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between TelstraLimited and Singapore is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Telstra Limited and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and TelstraLimited 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 Telstra Limited 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 TelstraLimited i.e., TelstraLimited and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between TelstraLimited and Singapore Telecommunicatio
Assuming the 90 days horizon Telstra Limited is expected to generate 2.05 times more return on investment than Singapore Telecommunicatio. However, TelstraLimited is 2.05 times more volatile than Singapore Telecommunications Limited. It trades about 0.14 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about -0.09 per unit of risk. If you would invest 219.00 in Telstra Limited on November 3, 2024 and sell it today you would earn a total of 25.00 from holding Telstra Limited or generate 11.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Telstra Limited vs. Singapore Telecommunications L
Performance |
| Timeline |
| Telstra Limited |
| Singapore Telecommunicatio |
TelstraLimited and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TelstraLimited and Singapore Telecommunicatio
The main advantage of trading using opposite TelstraLimited and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TelstraLimited 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.| TelstraLimited vs. Proximus NV ADR | TelstraLimited vs. Singapore Telecommunications Limited | TelstraLimited vs. MTN Group Ltd | TelstraLimited vs. Tele2 AB |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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