Correlation Between Singapore Airlines and RCM TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES 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 RCM TECHNOLOGIES, you can compare the effects of market volatilities on Singapore Airlines and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and RCM TECHNOLOGIES.
Diversification Opportunities for Singapore Airlines and RCM TECHNOLOGIES
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Singapore and RCM is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and RCM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM TECHNOLOGIES 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 RCM TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM TECHNOLOGIES has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and RCM TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Singapore Airlines and RCM TECHNOLOGIES
Assuming the 90 days trading horizon Singapore Airlines is expected to generate 2.37 times less return on investment than RCM TECHNOLOGIES. But when comparing it to its historical volatility, Singapore Airlines Limited is 2.32 times less risky than RCM TECHNOLOGIES. It trades about 0.06 of its potential returns per unit of risk. RCM TECHNOLOGIES is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,770 in RCM TECHNOLOGIES on September 3, 2024 and sell it today you would earn a total of 370.00 from holding RCM TECHNOLOGIES or generate 20.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Airlines Limited vs. RCM TECHNOLOGIES
Performance |
| Timeline |
| Singapore Airlines |
| RCM TECHNOLOGIES |
Singapore Airlines and RCM TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and RCM TECHNOLOGIES
The main advantage of trading using opposite Singapore Airlines and RCM TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, RCM TECHNOLOGIES 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 RCM TECHNOLOGIES will offset losses from the drop in RCM TECHNOLOGIES's long position.| Singapore Airlines vs. Delta Air Lines | Singapore Airlines vs. AIR CHINA LTD | Singapore Airlines vs. RYANAIR HLDGS ADR | Singapore Airlines vs. Southwest Airlines Co |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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