Correlation Between Singapore Airlines and Tencent Music
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and Tencent Music 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 Tencent Music 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 Tencent Music Entertainment, you can compare the effects of market volatilities on Singapore Airlines and Tencent Music 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 Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and Tencent Music.
Diversification Opportunities for Singapore Airlines and Tencent Music
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Singapore and Tencent is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and Tencent Music Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Music Entert 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 Tencent Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Music Entert has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and Tencent Music go up and down completely randomly.
Pair Corralation between Singapore Airlines and Tencent Music
Assuming the 90 days trading horizon Singapore Airlines Limited is expected to generate 0.39 times more return on investment than Tencent Music. However, Singapore Airlines Limited is 2.55 times less risky than Tencent Music. It trades about 0.04 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about -0.03 per unit of risk. If you would invest 419.00 in Singapore Airlines Limited on September 1, 2024 and sell it today you would earn a total of 23.00 from holding Singapore Airlines Limited or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Airlines Limited vs. Tencent Music Entertainment
Performance |
| Timeline |
| Singapore Airlines |
| Tencent Music Entert |
Singapore Airlines and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and Tencent Music
The main advantage of trading using opposite Singapore Airlines and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, Tencent Music 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 Tencent Music will offset losses from the drop in Tencent Music's long position.| Singapore Airlines vs. Southwest Airlines Co | Singapore Airlines vs. Superior Plus Corp | Singapore Airlines vs. NMI Holdings | Singapore Airlines vs. Origin Agritech |
| Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc | Tencent Music vs. Apple Inc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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