Correlation Between BAE Systems and Singapore Technologies
Can any of the company-specific risk be diversified away by investing in both BAE Systems and Singapore Technologies 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 BAE Systems and Singapore Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BAE Systems PLC and Singapore Technologies Engineering, you can compare the effects of market volatilities on BAE Systems and Singapore Technologies 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 BAE Systems with a short position of Singapore Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAE Systems and Singapore Technologies.
Diversification Opportunities for BAE Systems and Singapore Technologies
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between BAE and Singapore is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding BAE Systems PLC and Singapore Technologies Enginee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Technologies and BAE Systems 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 BAE Systems PLC are associated (or correlated) with Singapore Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Technologies has no effect on the direction of BAE Systems i.e., BAE Systems and Singapore Technologies go up and down completely randomly.
Pair Corralation between BAE Systems and Singapore Technologies
Assuming the 90 days horizon BAE Systems PLC is expected to under-perform the Singapore Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, BAE Systems PLC is 1.22 times less risky than Singapore Technologies. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Singapore Technologies Engineering is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,480 in Singapore Technologies Engineering on September 4, 2024 and sell it today you would earn a total of 50.00 from holding Singapore Technologies Engineering or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BAE Systems PLC vs. Singapore Technologies Enginee
Performance |
| Timeline |
| BAE Systems PLC |
| Singapore Technologies |
BAE Systems and Singapore Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BAE Systems and Singapore Technologies
The main advantage of trading using opposite BAE Systems and Singapore Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAE Systems position performs unexpectedly, Singapore Technologies 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 Technologies will offset losses from the drop in Singapore Technologies' long position.| BAE Systems vs. Leonardo Spa | BAE Systems vs. QinetiQ Group plc | BAE Systems vs. Leonardo SpA ADR | BAE Systems vs. Huntington Ingalls Industries |
| Singapore Technologies vs. Rolls Royce Holdings PLC | Singapore Technologies vs. VirTra Inc | Singapore Technologies vs. BWX Technologies | Singapore Technologies vs. Embraer SA ADR |
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 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.
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