Correlation Between Singapore Airlines and BLUESCOPE STEEL
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and BLUESCOPE STEEL 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 BLUESCOPE STEEL 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 BLUESCOPE STEEL, you can compare the effects of market volatilities on Singapore Airlines and BLUESCOPE STEEL 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 BLUESCOPE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and BLUESCOPE STEEL.
Diversification Opportunities for Singapore Airlines and BLUESCOPE STEEL
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Singapore and BLUESCOPE is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and BLUESCOPE STEEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLUESCOPE STEEL 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 BLUESCOPE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLUESCOPE STEEL has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and BLUESCOPE STEEL go up and down completely randomly.
Pair Corralation between Singapore Airlines and BLUESCOPE STEEL
Assuming the 90 days trading horizon Singapore Airlines Limited is expected to under-perform the BLUESCOPE STEEL. But the stock apears to be less risky and, when comparing its historical volatility, Singapore Airlines Limited is 1.9 times less risky than BLUESCOPE STEEL. The stock trades about 0.0 of its potential returns per unit of risk. The BLUESCOPE STEEL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,280 in BLUESCOPE STEEL on August 28, 2024 and sell it today you would earn a total of 20.00 from holding BLUESCOPE STEEL or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Airlines Limited vs. BLUESCOPE STEEL
Performance |
| Timeline |
| Singapore Airlines |
| BLUESCOPE STEEL |
Singapore Airlines and BLUESCOPE STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and BLUESCOPE STEEL
The main advantage of trading using opposite Singapore Airlines and BLUESCOPE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, BLUESCOPE STEEL 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 BLUESCOPE STEEL will offset losses from the drop in BLUESCOPE STEEL's long position.| Singapore Airlines vs. ANTA SPORTS PRODUCT | Singapore Airlines vs. Daido Steel Co | Singapore Airlines vs. BLUESCOPE STEEL | Singapore Airlines vs. Perma Fix Environmental Services |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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