Correlation Between City Developments and Singapore Technologies

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

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

Diversification Opportunities for City Developments and Singapore Technologies

0.22

Correlation Coefficient

City Developments  Singapore Technologies

Modest diversification

The 3 months correlation between City and Singapore is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding City Developments and Singapore Technologies Enginee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Technologies and City Developments 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 City Developments are associated (or correlated) with Singapore Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Technologies has no effect on the direction of City Developments i.e., City Developments and Singapore Technologies go up and down completely randomly.

Pair Corralation between City Developments and Singapore Technologies

Assuming the 90 days horizon City Developments is expected to under-perform the Singapore Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, City Developments is 1.69 times less risky than Singapore Technologies. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Singapore Technologies Engineering is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,627  in Singapore Technologies Engineering on October 27, 2024 and sell it today you would earn a total of  837.00  from holding Singapore Technologies Engineering or generate 31.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.13%
Values	Daily Returns

City Developments  vs.  Singapore Technologies Enginee

City Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days City Developments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, City Developments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Singapore Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Singapore Technologies Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Singapore Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with City Developments and Singapore Technologies

The main advantage of trading using opposite City Developments and Singapore Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Developments position performs unexpectedly, Singapore Technologies 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 Technologies will offset losses from the drop in Singapore Technologies' long position.

The idea behind City Developments and Singapore Technologies Engineering 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.