Correlation Between Sembcorp Marine and Austal

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

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

Diversification Opportunities for Sembcorp Marine and Austal

-0.42

Correlation Coefficient

Sembcorp Marine  Austal

Very good diversification

The 3 months correlation between Sembcorp and Austal is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sembcorp Marine and Austal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austal Limited and Sembcorp Marine 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 Sembcorp Marine are associated (or correlated) with Austal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austal Limited has no effect on the direction of Sembcorp Marine i.e., Sembcorp Marine and Austal go up and down completely randomly.

Pair Corralation between Sembcorp Marine and Austal

Assuming the 90 days horizon Sembcorp Marine is expected to generate 7.34 times less return on investment than Austal. In addition to that, Sembcorp Marine is 1.87 times more volatile than Austal Limited. It trades about 0.0 of its total potential returns per unit of risk. Austal Limited is currently generating about 0.04 per unit of volatility. If you would invest  410.00  in Austal Limited on July 22, 2025 and sell it today you would earn a total of  25.00  from holding Austal Limited or generate 6.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Sembcorp Marine  vs.  Austal Limited

Sembcorp Marine

Risk-Adjusted Performance

Weakest

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

Austal Limited

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Austal Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Austal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sembcorp Marine and Austal

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

The idea behind Sembcorp Marine and Austal Limited 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.