Correlation Between American Defense and Sembcorp Marine
Can any of the company-specific risk be diversified away by investing in both American Defense and Sembcorp Marine 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 American Defense and Sembcorp Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Defense Systems and Sembcorp Marine, you can compare the effects of market volatilities on American Defense and Sembcorp Marine 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 American Defense with a short position of Sembcorp Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Defense and Sembcorp Marine.
Diversification Opportunities for American Defense and Sembcorp Marine
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Sembcorp is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Defense Systems and Sembcorp Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sembcorp Marine and American Defense 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 American Defense Systems are associated (or correlated) with Sembcorp Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sembcorp Marine has no effect on the direction of American Defense i.e., American Defense and Sembcorp Marine go up and down completely randomly.
Pair Corralation between American Defense and Sembcorp Marine
If you would invest 0.02 in American Defense Systems on August 27, 2024 and sell it today you would earn a total of 0.00 from holding American Defense Systems or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
American Defense Systems vs. Sembcorp Marine
Performance |
| Timeline |
| American Defense Systems |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sembcorp Marine |
American Defense and Sembcorp Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Defense and Sembcorp Marine
The main advantage of trading using opposite American Defense and Sembcorp Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Defense position performs unexpectedly, Sembcorp Marine 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 Sembcorp Marine will offset losses from the drop in Sembcorp Marine's long position.| American Defense vs. PME Inc | American Defense vs. Electro Optic Systems | American Defense vs. Astronics Corp Cl | American Defense vs. V2X Inc |
| Sembcorp Marine vs. Moog Inc | Sembcorp Marine vs. BAE Systems PLC | Sembcorp Marine vs. Park Electrochemical | Sembcorp Marine vs. Triumph Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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