Correlation Between Signal Advance and Singapore Technologies

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

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

Diversification Opportunities for Signal Advance and Singapore Technologies

-0.34

Correlation Coefficient

Signal Advance  Singapore Technologies

Very good diversification

The 3 months correlation between Signal and Singapore is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Signal Advance and Singapore Technologies Enginee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Technologies and Signal Advance 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 Signal Advance 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 Signal Advance i.e., Signal Advance and Singapore Technologies go up and down completely randomly.

Pair Corralation between Signal Advance and Singapore Technologies

Given the investment horizon of 90 days Signal Advance is expected to generate 6.82 times more return on investment than Singapore Technologies. However, Signal Advance is 6.82 times more volatile than Singapore Technologies Engineering. It trades about 0.07 of its potential returns per unit of risk. Singapore Technologies Engineering is currently generating about 0.06 per unit of risk. If you would invest  8.30  in Signal Advance on October 12, 2024 and sell it today you would lose (0.90) from holding Signal Advance or give up 10.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.19%
Values	Daily Returns

Signal Advance  vs.  Singapore Technologies Enginee

Signal Advance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Signal Advance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Signal Advance disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Signal Advance and Singapore Technologies

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

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.