Correlation Between Thales SA and Sembcorp Marine
Can any of the company-specific risk be diversified away by investing in both Thales SA and Sembcorp Marine 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 Thales SA and Sembcorp Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thales SA and Sembcorp Marine, you can compare the effects of market volatilities on Thales SA and Sembcorp Marine 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 Thales SA with a short position of Sembcorp Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thales SA and Sembcorp Marine.
Diversification Opportunities for Thales SA and Sembcorp Marine
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thales and Sembcorp is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Thales SA and Sembcorp Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sembcorp Marine and Thales SA 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 Thales SA are associated (or correlated) with Sembcorp Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sembcorp Marine has no effect on the direction of Thales SA i.e., Thales SA and Sembcorp Marine go up and down completely randomly.
Pair Corralation between Thales SA and Sembcorp Marine
Assuming the 90 days horizon Thales SA is expected to under-perform the Sembcorp Marine. But the pink sheet apears to be less risky and, when comparing its historical volatility, Thales SA is 4.37 times less risky than Sembcorp Marine. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Sembcorp Marine is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 137.00 in Sembcorp Marine on August 29, 2024 and sell it today you would earn a total of 10.00 from holding Sembcorp Marine or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Thales SA vs. Sembcorp Marine
Performance |
| Timeline |
| Thales SA |
| Sembcorp Marine |
Thales SA and Sembcorp Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thales SA and Sembcorp Marine
The main advantage of trading using opposite Thales SA and Sembcorp Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thales SA position performs unexpectedly, Sembcorp Marine 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 Sembcorp Marine will offset losses from the drop in Sembcorp Marine's long position.| Thales SA vs. MTU Aero Engines | Thales SA vs. Singapore Technologies Engineering | Thales SA vs. Safran SA | Thales SA vs. Thales SA ADR |
| Sembcorp Marine vs. Austal Limited | Sembcorp Marine vs. Rolls Royce Holdings PLC | Sembcorp Marine vs. AAR Corp | Sembcorp Marine vs. Eve Holding |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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