Correlation Between Singapore Technologies and MTU Aero
Can any of the company-specific risk be diversified away by investing in both Singapore Technologies and MTU Aero 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 Singapore Technologies and MTU Aero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Technologies Engineering and MTU Aero Engines, you can compare the effects of market volatilities on Singapore Technologies and MTU Aero 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 Singapore Technologies with a short position of MTU Aero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Technologies and MTU Aero.
Diversification Opportunities for Singapore Technologies and MTU Aero
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Singapore and MTU is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Technologies Enginee and MTU Aero Engines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTU Aero Engines and Singapore Technologies 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 Singapore Technologies Engineering are associated (or correlated) with MTU Aero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTU Aero Engines has no effect on the direction of Singapore Technologies i.e., Singapore Technologies and MTU Aero go up and down completely randomly.
Pair Corralation between Singapore Technologies and MTU Aero
Assuming the 90 days horizon Singapore Technologies Engineering is expected to generate 1.75 times more return on investment than MTU Aero. However, Singapore Technologies is 1.75 times more volatile than MTU Aero Engines. It trades about 0.06 of its potential returns per unit of risk. MTU Aero Engines is currently generating about 0.06 per unit of risk. If you would invest 324.00 in Singapore Technologies Engineering on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Singapore Technologies Engineering or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Technologies Enginee vs. MTU Aero Engines
Performance |
| Timeline |
| Singapore Technologies |
| MTU Aero Engines |
Singapore Technologies and MTU Aero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Technologies and MTU Aero
The main advantage of trading using opposite Singapore Technologies and MTU Aero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Technologies position performs unexpectedly, MTU Aero 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 MTU Aero will offset losses from the drop in MTU Aero's long position.| Singapore Technologies vs. Firan Technology Group | Singapore Technologies vs. 808 Renewable Energy | Singapore Technologies vs. Park Electrochemical | Singapore Technologies vs. Innovative Solutions and |
| MTU Aero vs. Firan Technology Group | MTU Aero vs. 808 Renewable Energy | MTU Aero vs. Park Electrochemical | MTU Aero vs. Innovative Solutions and |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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