Correlation Between Telenor ASA and Singapore Telecommunicatio

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

By analyzing existing cross correlation between Telenor ASA and Singapore Telecommunications PK, you can compare the effects of market volatilities on Telenor ASA and Singapore Telecommunicatio 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 Telenor ASA with a short position of Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telenor ASA and Singapore Telecommunicatio.

Diversification Opportunities for Telenor ASA and Singapore Telecommunicatio

0.75

Correlation Coefficient

Telenor ASA  Singapore Telecommunicatio

Poor diversification

The 3 months correlation between Telenor and Singapore is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA and Singapore Telecommunications P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and Telenor ASA 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 Telenor ASA are associated (or correlated) with Singapore Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Telecommunicatio has no effect on the direction of Telenor ASA i.e., Telenor ASA and Singapore Telecommunicatio go up and down completely randomly.

Pair Corralation between Telenor ASA and Singapore Telecommunicatio

Assuming the 90 days horizon Telenor ASA is expected to generate 1.89 times less return on investment than Singapore Telecommunicatio. In addition to that, Telenor ASA is 2.02 times more volatile than Singapore Telecommunications PK. It trades about 0.03 of its total potential returns per unit of risk. Singapore Telecommunications PK is currently generating about 0.1 per unit of volatility. If you would invest  1,718  in Singapore Telecommunications PK on October 2, 2024 and sell it today you would earn a total of  550.00  from holding Singapore Telecommunications PK or generate 32.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	81.58%
Values	Daily Returns

Telenor ASA  vs.  Singapore Telecommunications P

Telenor ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telenor ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Singapore Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Singapore Telecommunications PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators 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 Telenor ASA and Singapore Telecommunicatio

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

The idea behind Telenor ASA and Singapore Telecommunications PK 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.