Correlation Between Singapore Telecommunicatio and PPG Industries

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

Diversification Opportunities for Singapore Telecommunicatio and PPG Industries

0.13

Correlation Coefficient

Singapore Telecommunicatio  PPG Industries

Average diversification

The 3 months correlation between Singapore and PPG is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries 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 PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and PPG Industries go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and PPG Industries

Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to generate 1.27 times more return on investment than PPG Industries. However, Singapore Telecommunicatio is 1.27 times more volatile than PPG Industries. It trades about 0.09 of its potential returns per unit of risk. PPG Industries is currently generating about -0.04 per unit of risk. If you would invest  159.00  in Singapore Telecommunications Limited on October 9, 2024 and sell it today you would earn a total of  59.00  from holding Singapore Telecommunications Limited or generate 37.11% 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.  PPG Industries

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.

PPG Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PPG Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PPG Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Singapore Telecommunicatio and PPG Industries

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

The idea behind Singapore Telecommunications Limited and PPG Industries 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.