Correlation Between Singapore Telecommunicatio and XL Axiata

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

Diversification Opportunities for Singapore Telecommunicatio and XL Axiata

0.3

Correlation Coefficient

Singapore Telecommunicatio  XL Axiata

Weak diversification

The 3 months correlation between Singapore and PTXKY is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and XL Axiata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Axiata Tbk 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 XL Axiata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Axiata Tbk has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and XL Axiata go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and XL Axiata

Assuming the 90 days horizon Singapore Telecommunications Limited is expected to generate 1.32 times more return on investment than XL Axiata. However, Singapore Telecommunicatio is 1.32 times more volatile than XL Axiata Tbk. It trades about 0.05 of its potential returns per unit of risk. XL Axiata Tbk is currently generating about 0.03 per unit of risk. If you would invest  150.00  in Singapore Telecommunications Limited on October 5, 2024 and sell it today you would earn a total of  77.00  from holding Singapore Telecommunications Limited or generate 51.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.45%
Values	Daily Returns

Singapore Telecommunications L  vs.  XL Axiata Tbk

Singapore Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Singapore Telecommunications Limited 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.

XL Axiata Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XL Axiata Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward-looking signals, XL Axiata may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Singapore Telecommunicatio and XL Axiata

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

The idea behind Singapore Telecommunications Limited and XL Axiata Tbk 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.