Correlation Between SBM OFFSHORE and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE 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 SBM OFFSHORE and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Singapore Airlines Limited, you can compare the effects of market volatilities on SBM OFFSHORE 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 SBM OFFSHORE with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Singapore Airlines.
Diversification Opportunities for SBM OFFSHORE and Singapore Airlines
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Singapore is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and SBM OFFSHORE 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 SBM OFFSHORE 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 SBM OFFSHORE i.e., SBM OFFSHORE and Singapore Airlines go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Singapore Airlines
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.13 times more return on investment than Singapore Airlines. However, SBM OFFSHORE is 1.13 times more volatile than Singapore Airlines Limited. It trades about 0.04 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.05 per unit of risk. If you would invest 1,288 in SBM OFFSHORE on October 12, 2024 and sell it today you would earn a total of 424.00 from holding SBM OFFSHORE or generate 32.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Singapore Airlines Limited
Performance |
| Timeline |
| SBM OFFSHORE |
| Singapore Airlines |
SBM OFFSHORE and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Singapore Airlines
The main advantage of trading using opposite SBM OFFSHORE and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE 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.| SBM OFFSHORE vs. SENECA FOODS A | SBM OFFSHORE vs. Astral Foods Limited | SBM OFFSHORE vs. GEELY AUTOMOBILE | SBM OFFSHORE vs. Aegean Airlines SA |
| Singapore Airlines vs. SOLSTAD OFFSHORE NK | Singapore Airlines vs. DELTA AIR LINES | Singapore Airlines vs. SBM OFFSHORE | Singapore Airlines vs. Wizz Air Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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