Correlation Between Singapore Airlines and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Singapore Airlines and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and SMA Solar.
Diversification Opportunities for Singapore Airlines and SMA Solar
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Singapore and SMA is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and SMA Solar go up and down completely randomly.
Pair Corralation between Singapore Airlines and SMA Solar
Assuming the 90 days trading horizon Singapore Airlines Limited is expected to generate 0.36 times more return on investment than SMA Solar. However, Singapore Airlines Limited is 2.8 times less risky than SMA Solar. It trades about 0.05 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.13 per unit of risk. If you would invest 377.00 in Singapore Airlines Limited on August 25, 2024 and sell it today you would earn a total of 73.00 from holding Singapore Airlines Limited or generate 19.36% 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. SMA Solar Technology
Performance |
| Timeline |
| Singapore Airlines |
| SMA Solar Technology |
Singapore Airlines and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and SMA Solar
The main advantage of trading using opposite Singapore Airlines and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Singapore Airlines vs. Qurate Retail Series | Singapore Airlines vs. Ross Stores | Singapore Airlines vs. National Beverage Corp | Singapore Airlines vs. QURATE RETAIL INC |
| SMA Solar vs. Superior Plus Corp | SMA Solar vs. Origin Agritech | SMA Solar vs. Identiv | SMA Solar vs. INTUITIVE SURGICAL |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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