Correlation Between Singapore Telecommunicatio and X FAB

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

Diversification Opportunities for Singapore Telecommunicatio and X FAB

0.12

Correlation Coefficient

Singapore Telecommunicatio  X FAB

Average diversification

The 3 months correlation between Singapore and XFB is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Telecommunications L and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Singapore Telecommunicatio i.e., Singapore Telecommunicatio and X FAB go up and down completely randomly.

Pair Corralation between Singapore Telecommunicatio and X FAB

Assuming the 90 days trading horizon Singapore Telecommunications Limited is expected to under-perform the X FAB. But the stock apears to be less risky and, when comparing its historical volatility, Singapore Telecommunications Limited is 1.77 times less risky than X FAB. The stock trades about -0.01 of its potential returns per unit of risk. The X FAB Silicon Foundries is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  508.00  in X FAB Silicon Foundries on September 30, 2024 and sell it today you would lose (7.00) from holding X FAB Silicon Foundries or give up 1.38% of portfolio value over 90 days.

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

Singapore Telecommunications L  vs.  X FAB Silicon Foundries

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.

X FAB Silicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X FAB Silicon Foundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, X FAB is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Singapore Telecommunicatio and X FAB

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

The idea behind Singapore Telecommunications Limited and X FAB Silicon Foundries 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.