Correlation Between Singapore Exchange and Intercontinental

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

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

Diversification Opportunities for Singapore Exchange and Intercontinental

-0.11

Correlation Coefficient

Singapore Exchange  Intercontinental

Good diversification

The 3 months correlation between Singapore and Intercontinental is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Exchange Limited and Intercontinental Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercontinental Exchange and Singapore Exchange 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 Exchange Limited are associated (or correlated) with Intercontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercontinental Exchange has no effect on the direction of Singapore Exchange i.e., Singapore Exchange and Intercontinental go up and down completely randomly.

Pair Corralation between Singapore Exchange and Intercontinental

Assuming the 90 days horizon Singapore Exchange Limited is expected to generate 1.83 times more return on investment than Intercontinental. However, Singapore Exchange is 1.83 times more volatile than Intercontinental Exchange. It trades about 0.01 of its potential returns per unit of risk. Intercontinental Exchange is currently generating about -0.07 per unit of risk. If you would invest  900.00  in Singapore Exchange Limited on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Singapore Exchange Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Singapore Exchange Limited  vs.  Intercontinental Exchange

Singapore Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

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

Intercontinental Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Singapore Exchange and Intercontinental

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

The idea behind Singapore Exchange Limited and Intercontinental Exchange 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.