Correlation Between Singapore Technologies and Rolls Royce
Can any of the company-specific risk be diversified away by investing in both Singapore Technologies and Rolls Royce 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 Rolls Royce 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 Rolls Royce Holdings PLC, you can compare the effects of market volatilities on Singapore Technologies and Rolls Royce 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 Rolls Royce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Technologies and Rolls Royce.
Diversification Opportunities for Singapore Technologies and Rolls Royce
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Singapore and Rolls is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Technologies Enginee and Rolls Royce Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rolls Royce Holdings 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 Rolls Royce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rolls Royce Holdings has no effect on the direction of Singapore Technologies i.e., Singapore Technologies and Rolls Royce go up and down completely randomly.
Pair Corralation between Singapore Technologies and Rolls Royce
Assuming the 90 days horizon Singapore Technologies Engineering is expected to generate 1.92 times more return on investment than Rolls Royce. However, Singapore Technologies is 1.92 times more volatile than Rolls Royce Holdings PLC. It trades about 0.05 of its potential returns per unit of risk. Rolls Royce Holdings PLC is currently generating about 0.04 per unit of risk. If you would invest 3,470 in Singapore Technologies Engineering on September 13, 2024 and sell it today you would earn a total of 99.00 from holding Singapore Technologies Engineering or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Technologies Enginee vs. Rolls Royce Holdings PLC
Performance |
| Timeline |
| Singapore Technologies |
| Rolls Royce Holdings |
Singapore Technologies and Rolls Royce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Technologies and Rolls Royce
The main advantage of trading using opposite Singapore Technologies and Rolls Royce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Technologies position performs unexpectedly, Rolls Royce 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 Rolls Royce will offset losses from the drop in Rolls Royce's long position.| Singapore Technologies vs. VirTra Inc | Singapore Technologies vs. BWX Technologies | Singapore Technologies vs. Embraer SA ADR | Singapore Technologies vs. HEICO |
| Rolls Royce vs. VirTra Inc | Rolls Royce vs. BWX Technologies | Rolls Royce vs. Embraer SA ADR | Rolls Royce vs. HEICO |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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