Correlation Between Rotork Plc and Singapore Technologies

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

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

Diversification Opportunities for Rotork Plc and Singapore Technologies

0.02

Correlation Coefficient

Rotork Plc  Singapore Technologies

Significant diversification

The 3 months correlation between Rotork and Singapore is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Rotork plc and Singapore Technologies Enginee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Technologies and Rotork Plc 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 Rotork plc 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 Rotork Plc i.e., Rotork Plc and Singapore Technologies go up and down completely randomly.

Pair Corralation between Rotork Plc and Singapore Technologies

Assuming the 90 days horizon Rotork plc is expected to under-perform the Singapore Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Rotork plc is 1.3 times less risky than Singapore Technologies. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Singapore Technologies Engineering is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  336.00  in Singapore Technologies Engineering on December 30, 2024 and sell it today you would earn a total of  203.00  from holding Singapore Technologies Engineering or generate 60.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Rotork plc  vs.  Singapore Technologies Enginee

Rotork plc

Risk-Adjusted Performance

Very Weak

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

Singapore Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Technologies Engineering are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Singapore Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rotork Plc and Singapore Technologies

The main advantage of trading using opposite Rotork Plc and Singapore Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rotork Plc 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 Rotork plc 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.