Correlation Between DBS Group and Singapore Telecommunicatio

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

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

Diversification Opportunities for DBS Group and Singapore Telecommunicatio

0.85

Correlation Coefficient

DBS Group  Singapore Telecommunicatio

Very poor diversification

The 3 months correlation between DBS and Singapore is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings and Singapore Telecommunications P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and DBS Group 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 DBS Group Holdings 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 DBS Group i.e., DBS Group and Singapore Telecommunicatio go up and down completely randomly.

Pair Corralation between DBS Group and Singapore Telecommunicatio

Assuming the 90 days horizon DBS Group is expected to generate 2.02 times less return on investment than Singapore Telecommunicatio. But when comparing it to its historical volatility, DBS Group Holdings is 1.14 times less risky than Singapore Telecommunicatio. It trades about 0.1 of its potential returns per unit of risk. Singapore Telecommunications PK is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,273  in Singapore Telecommunications PK on December 21, 2024 and sell it today you would earn a total of  276.00  from holding Singapore Telecommunications PK or generate 12.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

DBS Group Holdings  vs.  Singapore Telecommunications P

DBS Group Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DBS Group Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, DBS Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Singapore Telecommunicatio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Telecommunications PK are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Singapore Telecommunicatio showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DBS Group and Singapore Telecommunicatio

The main advantage of trading using opposite DBS Group and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group 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 DBS Group Holdings and Singapore Telecommunications PK 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.