Correlation Between Nippon Light and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Nippon Light 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 Nippon Light and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Light Metal and Singapore Airlines Limited, you can compare the effects of market volatilities on Nippon Light 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 Nippon Light with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Light and Singapore Airlines.
Diversification Opportunities for Nippon Light and Singapore Airlines
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nippon and Singapore is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Light Metal and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and Nippon Light 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 Nippon Light Metal 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 Nippon Light i.e., Nippon Light and Singapore Airlines go up and down completely randomly.
Pair Corralation between Nippon Light and Singapore Airlines
Assuming the 90 days horizon Nippon Light Metal is expected to generate 1.7 times more return on investment than Singapore Airlines. However, Nippon Light is 1.7 times more volatile than Singapore Airlines Limited. It trades about 0.16 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about -0.03 per unit of risk. If you would invest 930.00 in Nippon Light Metal on November 7, 2024 and sell it today you would earn a total of 50.00 from holding Nippon Light Metal or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nippon Light Metal vs. Singapore Airlines Limited
Performance |
| Timeline |
| Nippon Light Metal |
| Singapore Airlines |
Nippon Light and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Light and Singapore Airlines
The main advantage of trading using opposite Nippon Light and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Light 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.| Nippon Light vs. FIREWEED METALS P | Nippon Light vs. Eidesvik Offshore ASA | Nippon Light vs. PARKEN Sport Entertainment | Nippon Light vs. WT OFFSHORE |
| Singapore Airlines vs. Peijia Medical Limited | Singapore Airlines vs. Japan Medical Dynamic | Singapore Airlines vs. Advanced Medical Solutions | Singapore Airlines vs. Diamyd Medical AB |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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