Correlation Between STORE ELECTRONIC and SINGAPORE AIRLINES
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC 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 STORE ELECTRONIC and SINGAPORE AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and SINGAPORE AIRLINES, you can compare the effects of market volatilities on STORE ELECTRONIC 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 STORE ELECTRONIC with a short position of SINGAPORE AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and SINGAPORE AIRLINES.
Diversification Opportunities for STORE ELECTRONIC and SINGAPORE AIRLINES
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STORE and SINGAPORE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and SINGAPORE AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE AIRLINES and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC i.e., STORE ELECTRONIC and SINGAPORE AIRLINES go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and SINGAPORE AIRLINES
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 2.36 times more return on investment than SINGAPORE AIRLINES. However, STORE ELECTRONIC is 2.36 times more volatile than SINGAPORE AIRLINES. It trades about 0.05 of its potential returns per unit of risk. SINGAPORE AIRLINES is currently generating about 0.05 per unit of risk. If you would invest 10,496 in STORE ELECTRONIC on September 1, 2024 and sell it today you would earn a total of 3,524 from holding STORE ELECTRONIC or generate 33.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STORE ELECTRONIC vs. SINGAPORE AIRLINES
Performance |
| Timeline |
| STORE ELECTRONIC |
| SINGAPORE AIRLINES |
STORE ELECTRONIC and SINGAPORE AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and SINGAPORE AIRLINES
The main advantage of trading using opposite STORE ELECTRONIC and SINGAPORE AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC 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's long position.| STORE ELECTRONIC vs. CHIBA BANK | STORE ELECTRONIC vs. WESTLAKE CHEMICAL | STORE ELECTRONIC vs. Heartland Financial USA | STORE ELECTRONIC vs. Mitsui Chemicals |
| SINGAPORE AIRLINES vs. MAGNUM MINING EXP | SINGAPORE AIRLINES vs. FIREWEED METALS P | SINGAPORE AIRLINES vs. Alfa Financial Software | SINGAPORE AIRLINES vs. Coeur Mining |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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