Correlation Between Volkswagen and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Singapore Telecommunications Limited, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Singapore Telecommunicatio.
Diversification Opportunities for Volkswagen and Singapore Telecommunicatio
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Volkswagen and Singapore is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and Volkswagen 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 Volkswagen AG 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 Volkswagen i.e., Volkswagen and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between Volkswagen and Singapore Telecommunicatio
Assuming the 90 days horizon Volkswagen AG is expected to under-perform the Singapore Telecommunicatio. In addition to that, Volkswagen is 1.13 times more volatile than Singapore Telecommunications Limited. It trades about -0.28 of its total potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about -0.03 per unit of volatility. If you would invest 218.00 in Singapore Telecommunications Limited on August 28, 2024 and sell it today you would lose (3.00) from holding Singapore Telecommunications Limited or give up 1.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. Singapore Telecommunications L
Performance |
| Timeline |
| Volkswagen AG |
| Singapore Telecommunicatio |
Volkswagen and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Singapore Telecommunicatio
The main advantage of trading using opposite Volkswagen and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.| Volkswagen vs. ACCSYS TECHPLC EO | Volkswagen vs. ASPEN TECHINC DL | Volkswagen vs. FORMPIPE SOFTWARE AB | Volkswagen vs. Take Two Interactive Software |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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