Correlation Between Sembcorp Marine and Astronics
Can any of the company-specific risk be diversified away by investing in both Sembcorp Marine and Astronics 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 Sembcorp Marine and Astronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sembcorp Marine and Astronics, you can compare the effects of market volatilities on Sembcorp Marine and Astronics 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 Sembcorp Marine with a short position of Astronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sembcorp Marine and Astronics.
Diversification Opportunities for Sembcorp Marine and Astronics
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sembcorp and Astronics is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sembcorp Marine and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics and Sembcorp Marine 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 Sembcorp Marine are associated (or correlated) with Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of Sembcorp Marine i.e., Sembcorp Marine and Astronics go up and down completely randomly.
Pair Corralation between Sembcorp Marine and Astronics
Assuming the 90 days horizon Sembcorp Marine is expected to under-perform the Astronics. In addition to that, Sembcorp Marine is 1.57 times more volatile than Astronics. It trades about -0.1 of its total potential returns per unit of risk. Astronics is currently generating about -0.03 per unit of volatility. If you would invest 1,805 in Astronics on August 25, 2024 and sell it today you would lose (83.00) from holding Astronics or give up 4.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sembcorp Marine vs. Astronics
Performance |
| Timeline |
| Sembcorp Marine |
| Astronics |
Sembcorp Marine and Astronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sembcorp Marine and Astronics
The main advantage of trading using opposite Sembcorp Marine and Astronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sembcorp Marine position performs unexpectedly, Astronics 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 Astronics will offset losses from the drop in Astronics' long position.| Sembcorp Marine vs. Austal Limited | Sembcorp Marine vs. Rolls Royce Holdings PLC | Sembcorp Marine vs. AAR Corp | Sembcorp Marine vs. Eve Holding |
| Astronics vs. Ducommun Incorporated | Astronics vs. Innovative Solutions and | Astronics vs. National Presto Industries | Astronics vs. Park Electrochemical |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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