Correlation Between ServiceNow and SIMPPLE

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

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

Diversification Opportunities for ServiceNow and SIMPPLE

0.68

Correlation Coefficient

ServiceNow  SIMPPLE

Poor diversification

The 3 months correlation between ServiceNow and SIMPPLE is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow 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 ServiceNow 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 ServiceNow 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 ServiceNow i.e., ServiceNow and SIMPPLE go up and down completely randomly.

Pair Corralation between ServiceNow and SIMPPLE

Considering the 90-day investment horizon ServiceNow is expected to under-perform the SIMPPLE. But the stock apears to be less risky and, when comparing its historical volatility, ServiceNow is 2.38 times less risky than SIMPPLE. The stock trades about -0.17 of its potential returns per unit of risk. The SIMPPLE LTD Ordinary is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  49.00  in SIMPPLE LTD Ordinary on December 24, 2024 and sell it today you would earn a total of  5.00  from holding SIMPPLE LTD Ordinary or generate 10.2% return on investment over 90 days.

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

ServiceNow  vs.  SIMPPLE LTD Ordinary

ServiceNow

Risk-Adjusted Performance

Very Weak

Over the last 90 days ServiceNow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated 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 quite persistent basic indicators, SIMPPLE is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ServiceNow and SIMPPLE

The main advantage of trading using opposite ServiceNow and SIMPPLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ServiceNow 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 ServiceNow 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.