Correlation Between Safety Insurance and Singapore Telecommunicatio

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

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

Diversification Opportunities for Safety Insurance and Singapore Telecommunicatio

0.28

Correlation Coefficient

Safety Insurance  Singapore Telecommunicatio

Modest diversification

The 3 months correlation between Safety and Singapore is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and Safety Insurance 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 Safety Insurance Group 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 Safety Insurance i.e., Safety Insurance and Singapore Telecommunicatio go up and down completely randomly.

Pair Corralation between Safety Insurance and Singapore Telecommunicatio

Assuming the 90 days horizon Safety Insurance Group is expected to generate 1.0 times more return on investment than Singapore Telecommunicatio. However, Safety Insurance is 1.0 times more volatile than Singapore Telecommunications Limited. It trades about 0.03 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about 0.01 per unit of risk. If you would invest  7,515  in Safety Insurance Group on October 20, 2024 and sell it today you would earn a total of  135.00  from holding Safety Insurance Group or generate 1.8% return on investment over 90 days.

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

Safety Insurance Group  vs.  Singapore Telecommunications L

Safety Insurance

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Insurance Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Safety Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Singapore Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Safety Insurance and Singapore Telecommunicatio

The main advantage of trading using opposite Safety Insurance and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance 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 Safety Insurance Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.