Correlation Between Moodys and Singapore Exchange

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

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

Diversification Opportunities for Moodys and Singapore Exchange

0.66

Correlation Coefficient

Moodys  Singapore Exchange

Poor diversification

The 3 months correlation between Moodys and Singapore is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Moodys and Singapore Exchange Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Exchange and Moodys 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 Moodys 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 Moodys i.e., Moodys and Singapore Exchange go up and down completely randomly.

Pair Corralation between Moodys and Singapore Exchange

Considering the 90-day investment horizon Moodys is expected to under-perform the Singapore Exchange. But the stock apears to be less risky and, when comparing its historical volatility, Moodys is 1.76 times less risky than Singapore Exchange. The stock trades about -0.04 of its potential returns per unit of risk. The Singapore Exchange Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  900.00  in Singapore Exchange Limited on September 19, 2024 and sell it today you would lose (10.00) from holding Singapore Exchange Limited or give up 1.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Moodys  vs.  Singapore Exchange Limited

Moodys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moodys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Moodys is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Singapore Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Moodys and Singapore Exchange

The main advantage of trading using opposite Moodys and Singapore Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moodys 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 Moodys and Singapore Exchange 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.