Correlation Between Singapore Telecommunicatio and SBA Communications

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

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

Diversification Opportunities for Singapore Telecommunicatio and SBA Communications

0.27

Correlation Coefficient

Singapore Telecommunicatio  SBA Communications

Modest diversification

The 3 months correlation between Singapore and SBA is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and SBA Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBA Communications Corp and Singapore Telecommunicatio 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 Singapore Telecommunications Limited are associated (or correlated) with SBA Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBA Communications Corp has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and SBA Communications go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and SBA Communications

Assuming the 90 days trading horizon Singapore Telecommunicatio is expected to generate 2.58 times less return on investment than SBA Communications. But when comparing it to its historical volatility, Singapore Telecommunications Limited is 1.01 times less risky than SBA Communications. It trades about 0.03 of its potential returns per unit of risk. SBA Communications Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  20,323  in SBA Communications Corp on August 31, 2024 and sell it today you would earn a total of  1,307  from holding SBA Communications Corp or generate 6.43% return on investment over 90 days.

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

Singapore Telecommunications L  vs.  SBA Communications Corp

Singapore Telecommunicatio

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Telecommunications Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Singapore Telecommunicatio is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

SBA Communications Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SBA Communications Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SBA Communications may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Singapore Telecommunicatio and SBA Communications

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

The idea behind Singapore Telecommunications Limited and SBA Communications Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.