Correlation Between Sembcorp Marine and Eve Holding
Can any of the company-specific risk be diversified away by investing in both Sembcorp Marine and Eve Holding 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 Eve Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sembcorp Marine and Eve Holding, you can compare the effects of market volatilities on Sembcorp Marine and Eve Holding 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 Eve Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sembcorp Marine and Eve Holding.
Diversification Opportunities for Sembcorp Marine and Eve Holding
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sembcorp and Eve is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sembcorp Marine and Eve Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eve Holding 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 Eve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eve Holding has no effect on the direction of Sembcorp Marine i.e., Sembcorp Marine and Eve Holding go up and down completely randomly.
Pair Corralation between Sembcorp Marine and Eve Holding
Assuming the 90 days horizon Sembcorp Marine is expected to generate 14.42 times less return on investment than Eve Holding. In addition to that, Sembcorp Marine is 1.07 times more volatile than Eve Holding. It trades about 0.01 of its total potential returns per unit of risk. Eve Holding is currently generating about 0.18 per unit of volatility. If you would invest 339.00 in Eve Holding on August 29, 2024 and sell it today you would earn a total of 72.00 from holding Eve Holding or generate 21.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sembcorp Marine vs. Eve Holding
Performance |
| Timeline |
| Sembcorp Marine |
| Eve Holding |
Sembcorp Marine and Eve Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sembcorp Marine and Eve Holding
The main advantage of trading using opposite Sembcorp Marine and Eve Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sembcorp Marine position performs unexpectedly, Eve Holding 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 Eve Holding will offset losses from the drop in Eve Holding'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 |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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