Correlation Between Sembcorp Marine and Airbus Group
Can any of the company-specific risk be diversified away by investing in both Sembcorp Marine and Airbus Group 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 Airbus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sembcorp Marine and Airbus Group SE, you can compare the effects of market volatilities on Sembcorp Marine and Airbus Group 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 Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sembcorp Marine and Airbus Group.
Diversification Opportunities for Sembcorp Marine and Airbus Group
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sembcorp and Airbus is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sembcorp Marine and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE 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 Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of Sembcorp Marine i.e., Sembcorp Marine and Airbus Group go up and down completely randomly.
Pair Corralation between Sembcorp Marine and Airbus Group
Assuming the 90 days horizon Sembcorp Marine is expected to generate 2.98 times more return on investment than Airbus Group. However, Sembcorp Marine is 2.98 times more volatile than Airbus Group SE. It trades about 0.03 of its potential returns per unit of risk. Airbus Group SE is currently generating about -0.01 per unit of risk. If you would invest 140.00 in Sembcorp Marine on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Sembcorp Marine or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sembcorp Marine vs. Airbus Group SE
Performance |
| Timeline |
| Sembcorp Marine |
| Airbus Group SE |
Sembcorp Marine and Airbus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sembcorp Marine and Airbus Group
The main advantage of trading using opposite Sembcorp Marine and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sembcorp Marine position performs unexpectedly, Airbus Group 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 Airbus Group will offset losses from the drop in Airbus Group's long position.| Sembcorp Marine vs. Austal Limited | Sembcorp Marine vs. Rolls Royce Holdings PLC | Sembcorp Marine vs. AAR Corp | Sembcorp Marine vs. Eve Holding |
| Airbus Group vs. Airbus Group NV | Airbus Group vs. Park Electrochemical | Airbus Group vs. Rolls Royce Holdings PLC | Airbus Group vs. Triumph Group |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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