Correlation Between Deutsche Brse and Singapore Exchange

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

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

Diversification Opportunities for Deutsche Brse and Singapore Exchange

0.15

Correlation Coefficient

Deutsche Brse  Singapore Exchange

Average diversification

The 3 months correlation between Deutsche and Singapore is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Brse AG and Singapore Exchange Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Exchange and Deutsche Brse 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 Deutsche Brse AG are associated (or correlated) with Singapore Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Exchange has no effect on the direction of Deutsche Brse i.e., Deutsche Brse and Singapore Exchange go up and down completely randomly.

Pair Corralation between Deutsche Brse and Singapore Exchange

Assuming the 90 days horizon Deutsche Brse AG is expected to generate 2.78 times more return on investment than Singapore Exchange. However, Deutsche Brse is 2.78 times more volatile than Singapore Exchange Ltd. It trades about 0.02 of its potential returns per unit of risk. Singapore Exchange Ltd is currently generating about -0.15 per unit of risk. If you would invest  22,665  in Deutsche Brse AG on September 25, 2024 and sell it today you would earn a total of  144.00  from holding Deutsche Brse AG or generate 0.64% return on investment over 90 days.

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

Deutsche Brse AG  vs.  Singapore Exchange Ltd

Deutsche Brse AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Brse AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Deutsche Brse is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Singapore Exchange

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Exchange Ltd are ranked lower than 12 (%) 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.

Pair Trading with Deutsche Brse and Singapore Exchange

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

The idea behind Deutsche Brse AG and Singapore Exchange Ltd 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 CEOs Directory module to screen CEOs from public companies around the world.