Correlation Between Hong Kong and Singapore Exchange
Can any of the company-specific risk be diversified away by investing in both Hong Kong and Singapore Exchange 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 Hong Kong and Singapore Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong Exchange and Singapore Exchange Ltd, you can compare the effects of market volatilities on Hong Kong and Singapore Exchange 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 Hong Kong with a short position of Singapore Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Singapore Exchange.
Diversification Opportunities for Hong Kong and Singapore Exchange
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hong and Singapore is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Exchange and Singapore Exchange Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Exchange and Hong Kong 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 Hong Kong Exchange are associated (or correlated) with Singapore Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Exchange has no effect on the direction of Hong Kong i.e., Hong Kong and Singapore Exchange go up and down completely randomly.
Pair Corralation between Hong Kong and Singapore Exchange
Assuming the 90 days horizon Hong Kong Exchange is expected to under-perform the Singapore Exchange. In addition to that, Hong Kong is 2.14 times more volatile than Singapore Exchange Ltd. It trades about -0.02 of its total potential returns per unit of risk. Singapore Exchange Ltd is currently generating about 0.01 per unit of volatility. If you would invest 9,860 in Singapore Exchange Ltd on January 20, 2024 and sell it today you would earn a total of 29.00 from holding Singapore Exchange Ltd or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hong Kong Exchange vs. Singapore Exchange Ltd
Performance |
| Timeline |
| Hong Kong Exchange |
| Singapore Exchange |
Hong Kong and Singapore Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Singapore Exchange
The main advantage of trading using opposite Hong Kong and Singapore Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, Singapore Exchange 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 Singapore Exchange will offset losses from the drop in Singapore Exchange's long position.The idea behind Hong Kong Exchange and Singapore Exchange Ltd 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.| Singapore Exchange vs. MSCI Inc | Singapore Exchange vs. Otc Markets Group | Singapore Exchange vs. Dun Bradstreet Holdings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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