Correlation Between Singapore Exchange and Singapore Technologies

Can any of the company-specific risk be diversified away by investing in both Singapore Exchange and Singapore Technologies 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 Exchange and Singapore Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Singapore Exchange Ltd and Singapore Technologies Engineering, you can compare the effects of market volatilities on Singapore Exchange and Singapore Technologies 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 Exchange with a short position of Singapore Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Exchange and Singapore Technologies.

Diversification Opportunities for Singapore Exchange and Singapore Technologies

0.22

Correlation Coefficient

Singapore Exchange  Singapore Technologies

Modest diversification

The 3 months correlation between Singapore and Singapore is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Exchange Ltd and Singapore Technologies Enginee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Technologies and Singapore Exchange 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 Exchange Ltd are associated (or correlated) with Singapore Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Technologies has no effect on the direction of Singapore Exchange i.e., Singapore Exchange and Singapore Technologies go up and down completely randomly.

Pair Corralation between Singapore Exchange and Singapore Technologies

Assuming the 90 days horizon Singapore Exchange Ltd is expected to generate 34.46 times more return on investment than Singapore Technologies. However, Singapore Exchange is 34.46 times more volatile than Singapore Technologies Engineering. It trades about 0.11 of its potential returns per unit of risk. Singapore Technologies Engineering is currently generating about -0.04 per unit of risk. If you would invest  1,730  in Singapore Exchange Ltd on October 12, 2024 and sell it today you would earn a total of  111.00  from holding Singapore Exchange Ltd or generate 6.42% return on investment over 90 days.

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

Singapore Exchange Ltd  vs.  Singapore Technologies Enginee

Singapore Exchange

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Exchange Ltd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Singapore Exchange showed solid returns over the last few months and may actually be approaching a breakup point.

Singapore Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Singapore Technologies Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Singapore Exchange and Singapore Technologies

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

The idea behind Singapore Exchange Ltd and Singapore Technologies Engineering 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.