Correlation Between Singapore Telecommunicatio and HEXAGON AB

Can any of the company-specific risk be diversified away by investing in both Singapore Telecommunicatio and HEXAGON AB 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 HEXAGON AB 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 HEXAGON AB ADR1, you can compare the effects of market volatilities on Singapore Telecommunicatio and HEXAGON AB 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 HEXAGON AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Telecommunicatio and HEXAGON AB.

Diversification Opportunities for Singapore Telecommunicatio and HEXAGON AB

0.01

Correlation Coefficient

Singapore Telecommunicatio  HEXAGON AB

Significant diversification

The 3 months correlation between Singapore and HEXAGON is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and HEXAGON AB ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXAGON AB ADR1 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 HEXAGON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXAGON AB ADR1 has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and HEXAGON AB go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and HEXAGON AB

Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to under-perform the HEXAGON AB. But the stock apears to be less risky and, when comparing its historical volatility, Singapore Telecommunications Limited is 1.37 times less risky than HEXAGON AB. The stock trades about -0.02 of its potential returns per unit of risk. The HEXAGON AB ADR1 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  850.00  in HEXAGON AB ADR1 on September 13, 2024 and sell it today you would earn a total of  80.00  from holding HEXAGON AB ADR1 or generate 9.41% return on investment over 90 days.

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

Singapore Telecommunications L  vs.  HEXAGON AB ADR1

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.

HEXAGON AB ADR1

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HEXAGON AB ADR1 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, HEXAGON AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Singapore Telecommunicatio and HEXAGON AB

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

The idea behind Singapore Telecommunications Limited and HEXAGON AB ADR1 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.