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 ADR 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 ADR 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 ADR 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 ADR is expected to under-perform the Singapore Telecommunicatio. But the pink sheet apears to be less risky and, when comparing its historical volatility, Telenor ASA ADR is 1.1 times less risky than Singapore Telecommunicatio. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Singapore Telecommunications PK is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,230  in Singapore Telecommunications PK on September 28, 2024 and sell it today you would earn a total of  42.00  from holding Singapore Telecommunications PK or generate 1.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.06%
Values	Daily Returns

Telenor ASA ADR  vs.  Singapore Telecommunications P

Telenor ASA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telenor ASA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile 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.

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 ADR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.