Correlation Between CDL INVESTMENT and Singapore Telecommunicatio

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

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

Diversification Opportunities for CDL INVESTMENT and Singapore Telecommunicatio

0.41

Correlation Coefficient

CDL INVESTMENT  Singapore Telecommunicatio

Very weak diversification

The 3 months correlation between CDL and Singapore is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CDL INVESTMENT and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT i.e., CDL INVESTMENT and Singapore Telecommunicatio go up and down completely randomly.

Pair Corralation between CDL INVESTMENT and Singapore Telecommunicatio

Assuming the 90 days trading horizon CDL INVESTMENT is expected to generate 0.76 times more return on investment than Singapore Telecommunicatio. However, CDL INVESTMENT is 1.31 times less risky than Singapore Telecommunicatio. It trades about 0.09 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about 0.03 per unit of risk. If you would invest  43.00  in CDL INVESTMENT on September 24, 2024 and sell it today you would earn a total of  1.00  from holding CDL INVESTMENT or generate 2.33% return on investment over 90 days.

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

CDL INVESTMENT  vs.  Singapore Telecommunications L

CDL INVESTMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CDL INVESTMENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CDL INVESTMENT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 nearly stable basic indicators, Singapore Telecommunicatio is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CDL INVESTMENT and Singapore Telecommunicatio

The main advantage of trading using opposite CDL INVESTMENT and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDL INVESTMENT 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 CDL INVESTMENT and Singapore Telecommunications Limited 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.