Correlation Between Singapore Telecommunicatio and Crown Holdings

Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and Crown Holdings 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 Crown Holdings 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 Crown Holdings, you can compare the effects of market volatilities on Singapore Telecommunicatio and Crown Holdings 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 Crown Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and Crown Holdings.

Diversification Opportunities for Singapore Telecommunicatio and Crown Holdings

-0.17

Correlation Coefficient

Singapore Telecommunicatio  Crown Holdings

Good diversification

The 3 months correlation between Singapore and Crown is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings 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 Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and Crown Holdings go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and Crown Holdings

Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to generate 1.25 times more return on investment than Crown Holdings. However, Singapore Telecommunicatio is 1.25 times more volatile than Crown Holdings. It trades about 0.01 of its potential returns per unit of risk. Crown Holdings is currently generating about -0.16 per unit of risk. If you would invest  216.00  in Singapore Telecommunications Limited on September 23, 2024 and sell it today you would earn a total of  1.00  from holding Singapore Telecommunications Limited or generate 0.46% return on investment over 90 days.

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

Singapore Telecommunications L  vs.  Crown Holdings

Singapore Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Crown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Singapore Telecommunicatio and Crown Holdings

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

The idea behind Singapore Telecommunications Limited and Crown Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.