Correlation Between China BlueChemical and SINGAPORE AIRLINES
Can any of the company-specific risk be diversified away by investing in both China BlueChemical 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 China BlueChemical and SINGAPORE AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and SINGAPORE AIRLINES, you can compare the effects of market volatilities on China BlueChemical 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 China BlueChemical with a short position of SINGAPORE AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and SINGAPORE AIRLINES.
Diversification Opportunities for China BlueChemical and SINGAPORE AIRLINES
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and SINGAPORE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and SINGAPORE AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE AIRLINES and China BlueChemical 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 China BlueChemical 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 China BlueChemical i.e., China BlueChemical and SINGAPORE AIRLINES go up and down completely randomly.
Pair Corralation between China BlueChemical and SINGAPORE AIRLINES
Assuming the 90 days horizon China BlueChemical is expected to generate 4.63 times more return on investment than SINGAPORE AIRLINES. However, China BlueChemical is 4.63 times more volatile than SINGAPORE AIRLINES. It trades about 0.08 of its potential returns per unit of risk. SINGAPORE AIRLINES is currently generating about -0.05 per unit of risk. If you would invest 25.00 in China BlueChemical on October 14, 2024 and sell it today you would earn a total of 1.00 from holding China BlueChemical or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China BlueChemical vs. SINGAPORE AIRLINES
Performance |
| Timeline |
| China BlueChemical |
| SINGAPORE AIRLINES |
China BlueChemical and SINGAPORE AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and SINGAPORE AIRLINES
The main advantage of trading using opposite China BlueChemical and SINGAPORE AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical 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's long position.| China BlueChemical vs. Townsquare Media | China BlueChemical vs. GigaMedia | China BlueChemical vs. GALENA MINING LTD | China BlueChemical vs. CNVISION MEDIA |
| SINGAPORE AIRLINES vs. Playa Hotels Resorts | SINGAPORE AIRLINES vs. PLAYWAY SA ZY 10 | SINGAPORE AIRLINES vs. China BlueChemical | SINGAPORE AIRLINES vs. Playtech plc |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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