Correlation Between Walmart and Singapore Technologies

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

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

Diversification Opportunities for Walmart and Singapore Technologies

-0.49

Correlation Coefficient

Walmart  Singapore Technologies

Very good diversification

The 3 months correlation between Walmart and Singapore is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Singapore Technologies Enginee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Technologies and Walmart 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 Walmart 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 Walmart i.e., Walmart and Singapore Technologies go up and down completely randomly.

Pair Corralation between Walmart and Singapore Technologies

Considering the 90-day investment horizon Walmart is expected to generate 0.51 times more return on investment than Singapore Technologies. However, Walmart is 1.98 times less risky than Singapore Technologies. It trades about 0.2 of its potential returns per unit of risk. Singapore Technologies Engineering is currently generating about 0.06 per unit of risk. If you would invest  5,942  in Walmart on October 12, 2024 and sell it today you would earn a total of  3,238  from holding Walmart or generate 54.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.19%
Values	Daily Returns

Walmart  vs.  Singapore Technologies Enginee

Walmart

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of latest weak performance, the Stock's forward-looking signals 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 Walmart and Singapore Technologies

The main advantage of trading using opposite Walmart and Singapore Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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 Walmart 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.