Correlation Between Singapore Telecommunicatio and Elis SA

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

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

Diversification Opportunities for Singapore Telecommunicatio and Elis SA

0.01

Correlation Coefficient

Singapore Telecommunicatio  Elis SA

Significant diversification

The 3 months correlation between Singapore and Elis is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and Elis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elis SA and Singapore Telecommunicatio 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 Singapore Telecommunications Limited are associated (or correlated) with Elis SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elis SA has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and Elis SA go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and Elis SA

Assuming the 90 days trading horizon Singapore Telecommunicatio is expected to generate 3.01 times less return on investment than Elis SA. But when comparing it to its historical volatility, Singapore Telecommunications Limited is 1.16 times less risky than Elis SA. It trades about 0.07 of its potential returns per unit of risk. Elis SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,851  in Elis SA on December 22, 2024 and sell it today you would earn a total of  381.00  from holding Elis SA or generate 20.58% return on investment over 90 days.

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

Singapore Telecommunications L  vs.  Elis SA

Singapore Telecommunicatio

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Telecommunications Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Singapore Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Elis SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elis SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Elis SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singapore Telecommunicatio and Elis SA

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

The idea behind Singapore Telecommunications Limited and Elis SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.