Correlation Between L3Harris Technologies and Singapore Technologies

Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies and Singapore Technologies 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 L3Harris Technologies and Singapore Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between L3Harris Technologies and Singapore Technologies Engineering, you can compare the effects of market volatilities on L3Harris Technologies and Singapore Technologies 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 L3Harris Technologies with a short position of Singapore Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Singapore Technologies.

Diversification Opportunities for L3Harris Technologies and Singapore Technologies

0.15

Correlation Coefficient

L3Harris Technologies  Singapore Technologies

Average diversification

The 3 months correlation between L3Harris and Singapore is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and Singapore Technologies Enginee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Technologies and L3Harris Technologies 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 L3Harris Technologies are associated (or correlated) with Singapore Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Technologies has no effect on the direction of L3Harris Technologies i.e., L3Harris Technologies and Singapore Technologies go up and down completely randomly.

Pair Corralation between L3Harris Technologies and Singapore Technologies

Considering the 90-day investment horizon L3Harris Technologies is expected to generate 1.74 times more return on investment than Singapore Technologies. However, L3Harris Technologies is 1.74 times more volatile than Singapore Technologies Engineering. It trades about 0.11 of its potential returns per unit of risk. Singapore Technologies Engineering is currently generating about 0.03 per unit of risk. If you would invest  21,303  in L3Harris Technologies on October 23, 2024 and sell it today you would earn a total of  513.00  from holding L3Harris Technologies or generate 2.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

L3Harris Technologies  vs.  Singapore Technologies Enginee

L3Harris Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L3Harris Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Singapore Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Singapore Technologies Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Singapore Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with L3Harris Technologies and Singapore Technologies

The main advantage of trading using opposite L3Harris Technologies and Singapore Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies position performs unexpectedly, Singapore Technologies 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 Singapore Technologies will offset losses from the drop in Singapore Technologies' long position.

The idea behind L3Harris Technologies and Singapore Technologies Engineering pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..