Correlation Between Sembcorp Marine and HEICO
Can any of the company-specific risk be diversified away by investing in both Sembcorp Marine and HEICO 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 HEICO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sembcorp Marine and HEICO, you can compare the effects of market volatilities on Sembcorp Marine and HEICO 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 HEICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sembcorp Marine and HEICO.
Diversification Opportunities for Sembcorp Marine and HEICO
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sembcorp and HEICO is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sembcorp Marine and HEICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEICO 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 HEICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEICO has no effect on the direction of Sembcorp Marine i.e., Sembcorp Marine and HEICO go up and down completely randomly.
Pair Corralation between Sembcorp Marine and HEICO
Assuming the 90 days horizon Sembcorp Marine is expected to generate 1.91 times more return on investment than HEICO. However, Sembcorp Marine is 1.91 times more volatile than HEICO. It trades about 0.1 of its potential returns per unit of risk. HEICO is currently generating about -0.11 per unit of risk. If you would invest 147.00 in Sembcorp Marine on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Sembcorp Marine or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.18% |
| Values | Daily Returns |
Sembcorp Marine vs. HEICO
Performance |
| Timeline |
| Sembcorp Marine |
| HEICO |
Sembcorp Marine and HEICO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sembcorp Marine and HEICO
The main advantage of trading using opposite Sembcorp Marine and HEICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sembcorp Marine position performs unexpectedly, HEICO 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 HEICO will offset losses from the drop in HEICO'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 |
| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO vs. Rocket Lab USA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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