Correlation Between Singapore Airlines and InterContinental
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and InterContinental 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 InterContinental 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 InterContinental Hotels Group, you can compare the effects of market volatilities on Singapore Airlines and InterContinental 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 InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and InterContinental.
Diversification Opportunities for Singapore Airlines and InterContinental
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Singapore and InterContinental is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and InterContinental go up and down completely randomly.
Pair Corralation between Singapore Airlines and InterContinental
Assuming the 90 days trading horizon Singapore Airlines Limited is expected to under-perform the InterContinental. But the stock apears to be less risky and, when comparing its historical volatility, Singapore Airlines Limited is 1.16 times less risky than InterContinental. The stock trades about -0.03 of its potential returns per unit of risk. The InterContinental Hotels Group is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 10,200 in InterContinental Hotels Group on August 26, 2024 and sell it today you would earn a total of 1,500 from holding InterContinental Hotels Group or generate 14.71% 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. InterContinental Hotels Group
Performance |
| Timeline |
| Singapore Airlines |
| InterContinental Hotels |
Singapore Airlines and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and InterContinental
The main advantage of trading using opposite Singapore Airlines and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental's long position.| Singapore Airlines vs. Tower Semiconductor | Singapore Airlines vs. CECO ENVIRONMENTAL | Singapore Airlines vs. Perma Fix Environmental Services | Singapore Airlines vs. Magnachip Semiconductor |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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