Correlation Between LONDON STEXUNSPADRS1/2 and SINGAPORE EXUNSPADR/15

Can any of the company-specific risk be diversified away by investing in both LONDON STEXUNSPADRS1/2 and SINGAPORE EXUNSPADR/15 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 LONDON STEXUNSPADRS1/2 and SINGAPORE EXUNSPADR/15 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LONDON STEXUNSPADRS12 and SINGAPORE EXUNSPADR15, you can compare the effects of market volatilities on LONDON STEXUNSPADRS1/2 and SINGAPORE EXUNSPADR/15 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 LONDON STEXUNSPADRS1/2 with a short position of SINGAPORE EXUNSPADR/15. Check out your portfolio center. Please also check ongoing floating volatility patterns of LONDON STEXUNSPADRS1/2 and SINGAPORE EXUNSPADR/15.

Diversification Opportunities for LONDON STEXUNSPADRS1/2 and SINGAPORE EXUNSPADR/15

-0.03

Correlation Coefficient

LONDON STEXUNSPADRS1/2  SINGAPORE EXUNSPADR/15

Good diversification

The 3 months correlation between LONDON and SINGAPORE is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding LONDON STEXUNSPADRS12 and SINGAPORE EXUNSPADR15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE EXUNSPADR/15 and LONDON STEXUNSPADRS1/2 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 LONDON STEXUNSPADRS12 are associated (or correlated) with SINGAPORE EXUNSPADR/15. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINGAPORE EXUNSPADR/15 has no effect on the direction of LONDON STEXUNSPADRS1/2 i.e., LONDON STEXUNSPADRS1/2 and SINGAPORE EXUNSPADR/15 go up and down completely randomly.

Pair Corralation between LONDON STEXUNSPADRS1/2 and SINGAPORE EXUNSPADR/15

Assuming the 90 days trading horizon LONDON STEXUNSPADRS1/2 is expected to generate 7.0 times less return on investment than SINGAPORE EXUNSPADR/15. In addition to that, LONDON STEXUNSPADRS1/2 is 1.11 times more volatile than SINGAPORE EXUNSPADR15. It trades about 0.01 of its total potential returns per unit of risk. SINGAPORE EXUNSPADR15 is currently generating about 0.04 per unit of volatility. If you would invest  1,648  in SINGAPORE EXUNSPADR15 on December 30, 2024 and sell it today you would earn a total of  72.00  from holding SINGAPORE EXUNSPADR15 or generate 4.37% return on investment over 90 days.

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

LONDON STEXUNSPADRS12  vs.  SINGAPORE EXUNSPADR15

LONDON STEXUNSPADRS1/2

Risk-Adjusted Performance

Very Weak

Over the last 90 days LONDON STEXUNSPADRS12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LONDON STEXUNSPADRS1/2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SINGAPORE EXUNSPADR/15

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SINGAPORE EXUNSPADR15 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SINGAPORE EXUNSPADR/15 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LONDON STEXUNSPADRS1/2 and SINGAPORE EXUNSPADR/15

The main advantage of trading using opposite LONDON STEXUNSPADRS1/2 and SINGAPORE EXUNSPADR/15 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LONDON STEXUNSPADRS1/2 position performs unexpectedly, SINGAPORE EXUNSPADR/15 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 EXUNSPADR/15 will offset losses from the drop in SINGAPORE EXUNSPADR/15's long position.

The idea behind LONDON STEXUNSPADRS12 and SINGAPORE EXUNSPADR15 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.