Correlation Between PayPal Holdings and Sembcorp Marine
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings 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 PayPal Holdings and Sembcorp Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Sembcorp Marine, you can compare the effects of market volatilities on PayPal Holdings 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 PayPal Holdings with a short position of Sembcorp Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Sembcorp Marine.
Diversification Opportunities for PayPal Holdings and Sembcorp Marine
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PayPal and Sembcorp is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Sembcorp Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sembcorp Marine and PayPal Holdings 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 PayPal Holdings 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 PayPal Holdings i.e., PayPal Holdings and Sembcorp Marine go up and down completely randomly.
Pair Corralation between PayPal Holdings and Sembcorp Marine
Given the investment horizon of 90 days PayPal Holdings is expected to under-perform the Sembcorp Marine. But the stock apears to be less risky and, when comparing its historical volatility, PayPal Holdings is 2.8 times less risky than Sembcorp Marine. The stock trades about -0.27 of its potential returns per unit of risk. The Sembcorp Marine is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 166.00 in Sembcorp Marine on November 27, 2024 and sell it today you would lose (21.00) from holding Sembcorp Marine or give up 12.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
PayPal Holdings vs. Sembcorp Marine
Performance |
| Timeline |
| PayPal Holdings |
| Sembcorp Marine |
PayPal Holdings and Sembcorp Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Sembcorp Marine
The main advantage of trading using opposite PayPal Holdings and Sembcorp Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings 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.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Commodity Directory Find actively traded commodities issued by global exchanges |