Correlation Between EMBARK EDUCATION and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both EMBARK EDUCATION 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 EMBARK EDUCATION and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMBARK EDUCATION LTD and Singapore Airlines Limited, you can compare the effects of market volatilities on EMBARK EDUCATION 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 EMBARK EDUCATION with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMBARK EDUCATION and Singapore Airlines.
Diversification Opportunities for EMBARK EDUCATION and Singapore Airlines
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between EMBARK and Singapore is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding EMBARK EDUCATION LTD and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and EMBARK EDUCATION 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 EMBARK EDUCATION LTD 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 EMBARK EDUCATION i.e., EMBARK EDUCATION and Singapore Airlines go up and down completely randomly.
Pair Corralation between EMBARK EDUCATION and Singapore Airlines
Assuming the 90 days horizon EMBARK EDUCATION LTD is expected to generate 0.68 times more return on investment than Singapore Airlines. However, EMBARK EDUCATION LTD is 1.47 times less risky than Singapore Airlines. It trades about 0.22 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.09 per unit of risk. If you would invest 30.00 in EMBARK EDUCATION LTD on September 5, 2024 and sell it today you would earn a total of 1.00 from holding EMBARK EDUCATION LTD or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
EMBARK EDUCATION LTD vs. Singapore Airlines Limited
Performance |
| Timeline |
| EMBARK EDUCATION LTD |
| Singapore Airlines |
EMBARK EDUCATION and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMBARK EDUCATION and Singapore Airlines
The main advantage of trading using opposite EMBARK EDUCATION and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMBARK EDUCATION 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.| EMBARK EDUCATION vs. Ross Stores | EMBARK EDUCATION vs. QURATE RETAIL INC | EMBARK EDUCATION vs. UMC Electronics Co | EMBARK EDUCATION vs. AEON STORES |
| Singapore Airlines vs. Delta Air Lines | Singapore Airlines vs. AIR CHINA LTD | Singapore Airlines vs. RYANAIR HLDGS ADR | Singapore Airlines vs. China Southern Airlines |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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