Correlation Between Singapore Technologies and L3Harris Technologies

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

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

Diversification Opportunities for Singapore Technologies and L3Harris Technologies

0.15

Correlation Coefficient

Singapore Technologies  L3Harris Technologies

Average diversification

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

Pair Corralation between Singapore Technologies and L3Harris Technologies

Assuming the 90 days horizon Singapore Technologies is expected to generate 7.32 times less return on investment than L3Harris Technologies. But when comparing it to its historical volatility, Singapore Technologies Engineering is 1.74 times less risky than L3Harris Technologies. It trades about 0.03 of its potential returns per unit of risk. L3Harris Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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

Singapore Technologies Enginee  vs.  L3Harris Technologies

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.

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.

Pair Trading with Singapore Technologies and L3Harris Technologies

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

The idea behind Singapore Technologies Engineering and L3Harris Technologies 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.