Correlation Between Rai Way and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Rai Way and Singapore Airlines 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 Rai Way and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rai Way SpA and Singapore Airlines Limited, you can compare the effects of market volatilities on Rai Way and Singapore Airlines 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 Rai Way with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rai Way and Singapore Airlines.
Diversification Opportunities for Rai Way and Singapore Airlines
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Rai and Singapore is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Rai Way SpA and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and Rai Way 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 Rai Way SpA are associated (or correlated) with Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of Rai Way i.e., Rai Way and Singapore Airlines go up and down completely randomly.
Pair Corralation between Rai Way and Singapore Airlines
Assuming the 90 days horizon Rai Way SpA is expected to under-perform the Singapore Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Rai Way SpA is 1.24 times less risky than Singapore Airlines. The stock trades about 0.0 of its potential returns per unit of risk. The Singapore Airlines Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 418.00 in Singapore Airlines Limited on September 3, 2024 and sell it today you would earn a total of 24.00 from holding Singapore Airlines Limited or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rai Way SpA vs. Singapore Airlines Limited
Performance |
| Timeline |
| Rai Way SpA |
| Singapore Airlines |
Rai Way and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rai Way and Singapore Airlines
The main advantage of trading using opposite Rai Way and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rai Way position performs unexpectedly, Singapore Airlines 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 Airlines will offset losses from the drop in Singapore Airlines' long position.| Rai Way vs. Commonwealth Bank of | Rai Way vs. Warner Music Group | Rai Way vs. Regions Financial | Rai Way vs. NORTHEAST UTILITIES |
| Singapore Airlines vs. Delta Air Lines | Singapore Airlines vs. AIR CHINA LTD | Singapore Airlines vs. RYANAIR HLDGS ADR | Singapore Airlines vs. Southwest Airlines Co |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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