Correlation Between Singapore Telecommunicatio and Darden Restaurants

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

Diversification Opportunities for Singapore Telecommunicatio and Darden Restaurants

0.12

Correlation Coefficient

Singapore Telecommunicatio  Darden Restaurants

Average diversification

The 3 months correlation between Singapore and Darden is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants 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 Darden Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and Darden Restaurants go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and Darden Restaurants

Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to generate 1.02 times more return on investment than Darden Restaurants. However, Singapore Telecommunicatio is 1.02 times more volatile than Darden Restaurants. It trades about 0.09 of its potential returns per unit of risk. Darden Restaurants is currently generating about 0.06 per unit of risk. If you would invest  153.00  in Singapore Telecommunications Limited on October 5, 2024 and sell it today you would earn a total of  68.00  from holding Singapore Telecommunications Limited or generate 44.44% 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.  Darden Restaurants

Singapore Telecommunicatio

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Singapore Telecommunications Limited has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Darden Restaurants

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Darden Restaurants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, Darden Restaurants unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singapore Telecommunicatio and Darden Restaurants

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

The idea behind Singapore Telecommunications Limited and Darden Restaurants 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 Stocks Directory module to find actively traded stocks across global markets.