Correlation Between Universal Entertainment and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Universal Entertainment 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 Universal Entertainment and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Entertainment and Singapore Airlines Limited, you can compare the effects of market volatilities on Universal Entertainment 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 Universal Entertainment with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Entertainment and Singapore Airlines.
Diversification Opportunities for Universal Entertainment and Singapore Airlines
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Singapore is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Universal Entertainment and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment i.e., Universal Entertainment and Singapore Airlines go up and down completely randomly.
Pair Corralation between Universal Entertainment and Singapore Airlines
Assuming the 90 days trading horizon Universal Entertainment is expected to generate 2.88 times more return on investment than Singapore Airlines. However, Universal Entertainment is 2.88 times more volatile than Singapore Airlines Limited. It trades about 0.2 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 590.00 in Universal Entertainment on October 21, 2024 and sell it today you would earn a total of 60.00 from holding Universal Entertainment or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Entertainment vs. Singapore Airlines Limited
Performance |
| Timeline |
| Universal Entertainment |
| Singapore Airlines |
Universal Entertainment and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Entertainment and Singapore Airlines
The main advantage of trading using opposite Universal Entertainment and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Entertainment 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.| Universal Entertainment vs. USWE SPORTS AB | Universal Entertainment vs. Luckin Coffee | Universal Entertainment vs. TRAVEL LEISURE DL 01 | Universal Entertainment vs. PT Wintermar Offshore |
| Singapore Airlines vs. SPORTING | Singapore Airlines vs. Air Transport Services | Singapore Airlines vs. PARKEN Sport Entertainment | Singapore Airlines vs. CarsalesCom |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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