Correlation Between Singapore Telecommunicatio and China Overseas

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

Diversification Opportunities for Singapore Telecommunicatio and China Overseas

-0.08

Correlation Coefficient

Singapore Telecommunicatio  China Overseas

Good diversification

The 3 months correlation between Singapore and China is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas Land 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 China Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and China Overseas go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and China Overseas

Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to generate 0.47 times more return on investment than China Overseas. However, Singapore Telecommunications Limited is 2.14 times less risky than China Overseas. It trades about 0.1 of its potential returns per unit of risk. China Overseas Land is currently generating about -0.15 per unit of risk. If you would invest  214.00  in Singapore Telecommunications Limited on October 9, 2024 and sell it today you would earn a total of  4.00  from holding Singapore Telecommunications Limited or generate 1.87% return on investment over 90 days.

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

Singapore Telecommunications L  vs.  China Overseas Land

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

China Overseas Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Overseas Land has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Singapore Telecommunicatio and China Overseas

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

The idea behind Singapore Telecommunications Limited and China Overseas Land 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.