Correlation Between Citigroup and Singapore Telecommunicatio

Can any of the company-specific risk be diversified away by investing in both Citigroup 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 Citigroup and Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Singapore Telecommunications Limited, you can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Singapore Telecommunicatio.

Diversification Opportunities for Citigroup and Singapore Telecommunicatio

-0.37

Correlation Coefficient

Citigroup  Singapore Telecommunicatio

Very good diversification

The 3 months correlation between Citigroup and Singapore is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and Singapore Telecommunicatio go up and down completely randomly.

Pair Corralation between Citigroup and Singapore Telecommunicatio

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.03 times less return on investment than Singapore Telecommunicatio. But when comparing it to its historical volatility, Citigroup is 1.25 times less risky than Singapore Telecommunicatio. It trades about 0.03 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  227.00  in Singapore Telecommunications Limited on December 29, 2024 and sell it today you would earn a total of  30.00  from holding Singapore Telecommunications Limited or generate 13.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.52%
Values	Daily Returns

Citigroup  vs.  Singapore Telecommunications L

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Singapore Telecommunicatio

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Telecommunications Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Singapore Telecommunicatio reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Singapore Telecommunicatio

The main advantage of trading using opposite Citigroup and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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 Citigroup 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.