Correlation Between SPACE and SIA Engineering
Can any of the company-specific risk be diversified away by investing in both SPACE and SIA Engineering 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 SPACE and SIA Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and SIA Engineering, you can compare the effects of market volatilities on SPACE and SIA Engineering 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 SPACE with a short position of SIA Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and SIA Engineering.
Diversification Opportunities for SPACE and SIA Engineering
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPACE and SIA is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and SIA Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIA Engineering and SPACE 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 SPACE are associated (or correlated) with SIA Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIA Engineering has no effect on the direction of SPACE i.e., SPACE and SIA Engineering go up and down completely randomly.
Pair Corralation between SPACE and SIA Engineering
Assuming the 90 days horizon SPACE is expected to under-perform the SIA Engineering. In addition to that, SPACE is 22.47 times more volatile than SIA Engineering. It trades about 0.0 of its total potential returns per unit of risk. SIA Engineering is currently generating about 0.11 per unit of volatility. If you would invest 1,685 in SIA Engineering on September 3, 2024 and sell it today you would earn a total of 59.00 from holding SIA Engineering or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
SPACE vs. SIA Engineering
Performance |
| Timeline |
| SPACE |
| SIA Engineering |
SPACE and SIA Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and SIA Engineering
The main advantage of trading using opposite SPACE and SIA Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE position performs unexpectedly, SIA Engineering 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 SIA Engineering will offset losses from the drop in SIA Engineering's long position.The idea behind SPACE and SIA Engineering 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.| SIA Engineering vs. Aena SME SA | SIA Engineering vs. SPACE | SIA Engineering vs. Bayview Acquisition Corp | SIA Engineering vs. T Rowe Price |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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