Correlation Between Alpha Divisions and Singha Estate

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

By analyzing existing cross correlation between Alpha Divisions PCL and Singha Estate Public, you can compare the effects of market volatilities on Alpha Divisions and Singha Estate 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 Alpha Divisions with a short position of Singha Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Divisions and Singha Estate.

Diversification Opportunities for Alpha Divisions and Singha Estate

0.59

Correlation Coefficient

Alpha Divisions  Singha Estate

Very weak diversification

The 3 months correlation between Alpha and Singha is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Divisions PCL and Singha Estate Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singha Estate Public and Alpha Divisions 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 Alpha Divisions PCL are associated (or correlated) with Singha Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singha Estate Public has no effect on the direction of Alpha Divisions i.e., Alpha Divisions and Singha Estate go up and down completely randomly.

Pair Corralation between Alpha Divisions and Singha Estate

Assuming the 90 days trading horizon Alpha Divisions is expected to generate 2.1 times less return on investment than Singha Estate. But when comparing it to its historical volatility, Alpha Divisions PCL is 1.41 times less risky than Singha Estate. It trades about 0.05 of its potential returns per unit of risk. Singha Estate Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  129.00  in Singha Estate Public on September 26, 2024 and sell it today you would lose (38.00) from holding Singha Estate Public or give up 29.46% of portfolio value over 90 days.

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

Alpha Divisions PCL  vs.  Singha Estate Public

Alpha Divisions PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Divisions PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Singha Estate Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Singha Estate Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Singha Estate disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Divisions and Singha Estate

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

The idea behind Alpha Divisions PCL and Singha Estate Public 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.