Correlation Between ANA Holdings and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both ANA Holdings 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 ANA Holdings and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANA Holdings ADR and Singapore Airlines, you can compare the effects of market volatilities on ANA Holdings 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 ANA Holdings with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANA Holdings and Singapore Airlines.
Diversification Opportunities for ANA Holdings and Singapore Airlines
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ANA and Singapore is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ANA Holdings ADR and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and ANA Holdings 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 ANA Holdings ADR 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 ANA Holdings i.e., ANA Holdings and Singapore Airlines go up and down completely randomly.
Pair Corralation between ANA Holdings and Singapore Airlines
Assuming the 90 days horizon ANA Holdings ADR is expected to generate 2.48 times more return on investment than Singapore Airlines. However, ANA Holdings is 2.48 times more volatile than Singapore Airlines. It trades about -0.06 of its potential returns per unit of risk. Singapore Airlines is currently generating about -0.18 per unit of risk. If you would invest 410.00 in ANA Holdings ADR on August 28, 2024 and sell it today you would lose (34.00) from holding ANA Holdings ADR or give up 8.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ANA Holdings ADR vs. Singapore Airlines
Performance |
| Timeline |
| ANA Holdings ADR |
| Singapore Airlines |
ANA Holdings and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANA Holdings and Singapore Airlines
The main advantage of trading using opposite ANA Holdings and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANA Holdings 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.| ANA Holdings vs. Cathay Pacific Airways | ANA Holdings vs. Air China Ltd | ANA Holdings vs. Ajinomoto Co ADR | ANA Holdings vs. Qantas Airways Ltd |
| Singapore Airlines vs. Cathay Pacific Airways | Singapore Airlines vs. Qantas Airways Ltd | Singapore Airlines vs. International Consolidated Airlines | Singapore Airlines vs. Singapore 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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