Correlation Between Tipco Foods and Singha Estate

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

By analyzing existing cross correlation between Tipco Foods Public and Singha Estate Public, you can compare the effects of market volatilities on Tipco Foods and Singha Estate 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 Tipco Foods with a short position of Singha Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tipco Foods and Singha Estate.

Diversification Opportunities for Tipco Foods and Singha Estate

-0.54

Correlation Coefficient

Tipco Foods  Singha Estate

Excellent diversification

The 3 months correlation between Tipco and Singha is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tipco Foods Public and Singha Estate Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singha Estate Public and Tipco Foods 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 Tipco Foods Public are associated (or correlated) with Singha Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singha Estate Public has no effect on the direction of Tipco Foods i.e., Tipco Foods and Singha Estate go up and down completely randomly.

Pair Corralation between Tipco Foods and Singha Estate

Assuming the 90 days trading horizon Tipco Foods is expected to generate 1.97 times less return on investment than Singha Estate. But when comparing it to its historical volatility, Tipco Foods Public is 1.42 times less risky than Singha Estate. It trades about 0.04 of its potential returns per unit of risk. Singha Estate Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  184.00  in Singha Estate Public on September 26, 2024 and sell it today you would lose (93.00) from holding Singha Estate Public or give up 50.54% of portfolio value over 90 days.

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

Tipco Foods Public  vs.  Singha Estate Public

Tipco Foods Public

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tipco Foods Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Tipco Foods is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Singha Estate Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Singha Estate Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Singha Estate disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tipco Foods and Singha Estate

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

The idea behind Tipco Foods Public and Singha Estate Public 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.