Correlation Between Singapore Telecommunicatio and BJs Wholesale

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

Diversification Opportunities for Singapore Telecommunicatio and BJs Wholesale

0.25

Correlation Coefficient

Singapore Telecommunicatio  BJs Wholesale

Modest diversification

The 3 months correlation between Singapore and BJs is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and BJs Wholesale Club in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Wholesale Club 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 BJs Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Wholesale Club has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and BJs Wholesale go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and BJs Wholesale

Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to generate 0.94 times more return on investment than BJs Wholesale. However, Singapore Telecommunications Limited is 1.06 times less risky than BJs Wholesale. It trades about 0.05 of its potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.04 per unit of risk. If you would invest  162.00  in Singapore Telecommunications Limited on October 23, 2024 and sell it today you would earn a total of  59.00  from holding Singapore Telecommunications Limited or generate 36.42% return on investment over 90 days.

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

Singapore Telecommunications L  vs.  BJs Wholesale Club

Singapore Telecommunicatio

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Telecommunications Limited are ranked lower than 2 (%) 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BJs Wholesale Club

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BJs Wholesale reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singapore Telecommunicatio and BJs Wholesale

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

The idea behind Singapore Telecommunications Limited and BJs Wholesale Club 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.