Correlation Between Procter Gamble and Sembcorp Marine
Can any of the company-specific risk be diversified away by investing in both Procter Gamble 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 Procter Gamble and Sembcorp Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Sembcorp Marine, you can compare the effects of market volatilities on Procter Gamble 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 Procter Gamble with a short position of Sembcorp Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Sembcorp Marine.
Diversification Opportunities for Procter Gamble and Sembcorp Marine
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and Sembcorp is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Sembcorp Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sembcorp Marine and Procter Gamble 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 Procter Gamble 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 Procter Gamble i.e., Procter Gamble and Sembcorp Marine go up and down completely randomly.
Pair Corralation between Procter Gamble and Sembcorp Marine
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 6.05 times less return on investment than Sembcorp Marine. But when comparing it to its historical volatility, Procter Gamble is 8.1 times less risky than Sembcorp Marine. It trades about 0.04 of its potential returns per unit of risk. Sembcorp Marine is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 176.00 in Sembcorp Marine on November 27, 2024 and sell it today you would lose (31.00) from holding Sembcorp Marine or give up 17.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 73.04% |
| Values | Daily Returns |
Procter Gamble vs. Sembcorp Marine
Performance |
| Timeline |
| Procter Gamble |
| Sembcorp Marine |
Procter Gamble and Sembcorp Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Sembcorp Marine
The main advantage of trading using opposite Procter Gamble and Sembcorp Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Church Dwight |
| Sembcorp Marine vs. Austal Limited | Sembcorp Marine vs. Rolls Royce Holdings PLC | Sembcorp Marine vs. AAR Corp | Sembcorp Marine vs. Eve Holding |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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