Correlation Between Singapore Airlines and Inspire Medical
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and Inspire Medical 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 Singapore Airlines and Inspire Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Airlines Limited and Inspire Medical Systems, you can compare the effects of market volatilities on Singapore Airlines and Inspire Medical 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 Singapore Airlines with a short position of Inspire Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and Inspire Medical.
Diversification Opportunities for Singapore Airlines and Inspire Medical
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Singapore and Inspire is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and Inspire Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Medical Systems and Singapore Airlines 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 Singapore Airlines Limited are associated (or correlated) with Inspire Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Medical Systems has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and Inspire Medical go up and down completely randomly.
Pair Corralation between Singapore Airlines and Inspire Medical
Assuming the 90 days trading horizon Singapore Airlines is expected to generate 10.67 times less return on investment than Inspire Medical. But when comparing it to its historical volatility, Singapore Airlines Limited is 2.76 times less risky than Inspire Medical. It trades about 0.03 of its potential returns per unit of risk. Inspire Medical Systems is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 11,465 in Inspire Medical Systems on October 25, 2024 and sell it today you would earn a total of 6,015 from holding Inspire Medical Systems or generate 52.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Airlines Limited vs. Inspire Medical Systems
Performance |
| Timeline |
| Singapore Airlines |
| Inspire Medical Systems |
Singapore Airlines and Inspire Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and Inspire Medical
The main advantage of trading using opposite Singapore Airlines and Inspire Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, Inspire Medical 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 Inspire Medical will offset losses from the drop in Inspire Medical's long position.| Singapore Airlines vs. Minerals Technologies | Singapore Airlines vs. Direct Line Insurance | Singapore Airlines vs. United Insurance Holdings | Singapore Airlines vs. Erste Group Bank |
| Inspire Medical vs. Lamar Advertising | Inspire Medical vs. GungHo Online Entertainment | Inspire Medical vs. Darden Restaurants | Inspire Medical vs. YATRA ONLINE DL 0001 |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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