Correlation Between SwissCom and Singapore Telecommunicatio

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

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

Diversification Opportunities for SwissCom and Singapore Telecommunicatio

0.73

Correlation Coefficient

SwissCom  Singapore Telecommunicatio

Poor diversification

The 3 months correlation between SwissCom and Singapore is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SwissCom AG and Singapore Telecommunications P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio and SwissCom 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 SwissCom AG 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 SwissCom i.e., SwissCom and Singapore Telecommunicatio go up and down completely randomly.

Pair Corralation between SwissCom and Singapore Telecommunicatio

Assuming the 90 days horizon SwissCom AG is expected to under-perform the Singapore Telecommunicatio. But the pink sheet apears to be less risky and, when comparing its historical volatility, SwissCom AG is 1.12 times less risky than Singapore Telecommunicatio. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Singapore Telecommunications PK is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  2,515  in Singapore Telecommunications PK on September 12, 2024 and sell it today you would lose (232.00) from holding Singapore Telecommunications PK or give up 9.22% of portfolio value over 90 days.

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

SwissCom AG  vs.  Singapore Telecommunications P

SwissCom AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SwissCom AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SwissCom and Singapore Telecommunicatio

The main advantage of trading using opposite SwissCom and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SwissCom 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 SwissCom AG 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.