Correlation Between Marine Products and SIMPPLE

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

By analyzing existing cross correlation between Marine Products and SIMPPLE LTD Ordinary, you can compare the effects of market volatilities on Marine Products and SIMPPLE 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 Marine Products with a short position of SIMPPLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marine Products and SIMPPLE.

Diversification Opportunities for Marine Products and SIMPPLE

0.51

Correlation Coefficient

Marine Products  SIMPPLE

Very weak diversification

The 3 months correlation between Marine and SIMPPLE is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and SIMPPLE LTD Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMPPLE LTD Ordinary and Marine Products 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 Marine Products are associated (or correlated) with SIMPPLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMPPLE LTD Ordinary has no effect on the direction of Marine Products i.e., Marine Products and SIMPPLE go up and down completely randomly.

Pair Corralation between Marine Products and SIMPPLE

Considering the 90-day investment horizon Marine Products is expected to generate 0.24 times more return on investment than SIMPPLE. However, Marine Products is 4.15 times less risky than SIMPPLE. It trades about -0.03 of its potential returns per unit of risk. SIMPPLE LTD Ordinary is currently generating about -0.12 per unit of risk. If you would invest  886.00  in Marine Products on December 28, 2024 and sell it today you would lose (48.00) from holding Marine Products or give up 5.42% of portfolio value over 90 days.

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

Marine Products  vs.  SIMPPLE LTD Ordinary

Marine Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marine Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Marine Products is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SIMPPLE LTD Ordinary

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIMPPLE LTD Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Marine Products and SIMPPLE

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

The idea behind Marine Products and SIMPPLE LTD Ordinary 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.