Correlation Between Qantas Airways and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Qantas Airways 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 Qantas Airways and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qantas Airways Limited and Singapore Airlines, you can compare the effects of market volatilities on Qantas Airways 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 Qantas Airways with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qantas Airways and Singapore Airlines.
Diversification Opportunities for Qantas Airways and Singapore Airlines
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Qantas and Singapore is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Qantas Airways Limited and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and Qantas Airways 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 Qantas Airways Limited 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 Qantas Airways i.e., Qantas Airways and Singapore Airlines go up and down completely randomly.
Pair Corralation between Qantas Airways and Singapore Airlines
Assuming the 90 days horizon Qantas Airways Limited is expected to generate 1.0 times more return on investment than Singapore Airlines. However, Qantas Airways Limited is 1.0 times less risky than Singapore Airlines. It trades about 0.16 of its potential returns per unit of risk. Singapore Airlines is currently generating about -0.19 per unit of risk. If you would invest 501.00 in Qantas Airways Limited on August 25, 2024 and sell it today you would earn a total of 39.00 from holding Qantas Airways Limited or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qantas Airways Limited vs. Singapore Airlines
Performance |
| Timeline |
| Qantas Airways |
| Singapore Airlines |
Qantas Airways and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qantas Airways and Singapore Airlines
The main advantage of trading using opposite Qantas Airways and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qantas Airways 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.| Qantas Airways vs. Finnair Oyj | Qantas Airways vs. easyJet plc | Qantas Airways vs. Norse Atlantic ASA | Qantas Airways vs. Air New Zealand |
| Singapore Airlines vs. Cathay Pacific Airways | Singapore Airlines vs. Qantas Airways Ltd | Singapore Airlines vs. International Consolidated Airlines | Singapore Airlines vs. Singapore Airlines |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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