Correlation Between Singapore Telecommunicatio and National Vision

Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and National Vision 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 National Vision 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 National Vision Holdings, you can compare the effects of market volatilities on Singapore Telecommunicatio and National Vision 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 National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and National Vision.

Diversification Opportunities for Singapore Telecommunicatio and National Vision

-0.06

Correlation Coefficient

Singapore Telecommunicatio  National Vision

Good diversification

The 3 months correlation between Singapore and National is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings 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 National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and National Vision go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and National Vision

Assuming the 90 days trading horizon Singapore Telecommunicatio is expected to generate 10.34 times less return on investment than National Vision. But when comparing it to its historical volatility, Singapore Telecommunications Limited is 1.66 times less risky than National Vision. It trades about 0.02 of its potential returns per unit of risk. National Vision Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  900.00  in National Vision Holdings on October 10, 2024 and sell it today you would earn a total of  150.00  from holding National Vision Holdings or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Singapore Telecommunications L  vs.  National Vision Holdings

Singapore Telecommunicatio

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Telecommunications Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Singapore Telecommunicatio is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

National Vision Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, National Vision unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singapore Telecommunicatio and National Vision

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

The idea behind Singapore Telecommunications Limited and National Vision Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.