Correlation Between Australian Agricultural and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural 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 Australian Agricultural and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Singapore Airlines Limited, you can compare the effects of market volatilities on Australian Agricultural 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 Australian Agricultural with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Singapore Airlines.
Diversification Opportunities for Australian Agricultural and Singapore Airlines
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and Singapore is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and Australian Agricultural 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 Australian Agricultural 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 Australian Agricultural i.e., Australian Agricultural and Singapore Airlines go up and down completely randomly.
Pair Corralation between Australian Agricultural and Singapore Airlines
Assuming the 90 days horizon Australian Agricultural is expected to generate 1.1 times more return on investment than Singapore Airlines. However, Australian Agricultural is 1.1 times more volatile than Singapore Airlines Limited. It trades about 0.0 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 82.00 in Australian Agricultural on October 25, 2024 and sell it today you would earn a total of 0.00 from holding Australian Agricultural or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Singapore Airlines Limited
Performance |
| Timeline |
| Australian Agricultural |
| Singapore Airlines |
Australian Agricultural and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Singapore Airlines
The main advantage of trading using opposite Australian Agricultural and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural 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.| Australian Agricultural vs. Archer Daniels Midland | Australian Agricultural vs. Tyson Foods | Australian Agricultural vs. MOWI ASA SPADR | Australian Agricultural vs. Mowi ASA |
| Singapore Airlines vs. Minerals Technologies | Singapore Airlines vs. Direct Line Insurance | Singapore Airlines vs. United Insurance Holdings | Singapore Airlines vs. Erste Group Bank |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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