Correlation Between International Consolidated and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Singapore Airlines, you can compare the effects of market volatilities on International Consolidated 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 International Consolidated with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Singapore Airlines.
Diversification Opportunities for International Consolidated and Singapore Airlines
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Singapore is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and Singapore Airlines go up and down completely randomly.
Pair Corralation between International Consolidated and Singapore Airlines
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 0.56 times more return on investment than Singapore Airlines. However, International Consolidated Airlines is 1.79 times less risky than Singapore Airlines. It trades about 0.14 of its potential returns per unit of risk. Singapore Airlines is currently generating about 0.02 per unit of risk. If you would invest 384.00 in International Consolidated Airlines on August 25, 2024 and sell it today you would earn a total of 233.00 from holding International Consolidated Airlines or generate 60.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.68% |
| Values | Daily Returns |
International Consolidated Air vs. Singapore Airlines
Performance |
| Timeline |
| International Consolidated |
| Singapore Airlines |
International Consolidated and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Singapore Airlines
The main advantage of trading using opposite International Consolidated and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.| International Consolidated vs. Air France KLM SA | International Consolidated vs. Air France KLM | International Consolidated vs. Finnair Oyj | International Consolidated vs. AirAsia Group Berhad |
| Singapore Airlines vs. Cathay Pacific Airways | Singapore Airlines vs. International Consolidated Airlines | Singapore Airlines vs. Air France KLM | Singapore Airlines vs. Qantas Airways Ltd |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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