Correlation Between KeppelLimited and Singapore Telecommunicatio

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

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

Diversification Opportunities for KeppelLimited and Singapore Telecommunicatio

0.37

Correlation Coefficient

KeppelLimited  Singapore Telecommunicatio

Weak diversification

The 3 months correlation between KeppelLimited and Singapore is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Keppel Limited and Singapore Telecommunications P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and KeppelLimited 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 Keppel Limited 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 KeppelLimited i.e., KeppelLimited and Singapore Telecommunicatio go up and down completely randomly.

Pair Corralation between KeppelLimited and Singapore Telecommunicatio

Assuming the 90 days horizon Keppel Limited is expected to generate 2.38 times more return on investment than Singapore Telecommunicatio. However, KeppelLimited is 2.38 times more volatile than Singapore Telecommunications PK. It trades about 0.02 of its potential returns per unit of risk. Singapore Telecommunications PK is currently generating about -0.01 per unit of risk. If you would invest  950.00  in Keppel Limited on September 5, 2024 and sell it today you would earn a total of  18.00  from holding Keppel Limited or generate 1.89% return on investment over 90 days.

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

Keppel Limited  vs.  Singapore Telecommunications P

Keppel Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keppel Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, KeppelLimited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 fairly strong basic indicators, Singapore Telecommunicatio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KeppelLimited and Singapore Telecommunicatio

The main advantage of trading using opposite KeppelLimited and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeppelLimited 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 Keppel Limited 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.