Correlation Between Singapore Airlines and OAKRIDGE INTERNATIONAL
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and OAKRIDGE INTERNATIONAL 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 OAKRIDGE INTERNATIONAL 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 OAKRIDGE INTERNATIONAL, you can compare the effects of market volatilities on Singapore Airlines and OAKRIDGE INTERNATIONAL 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 OAKRIDGE INTERNATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and OAKRIDGE INTERNATIONAL.
Diversification Opportunities for Singapore Airlines and OAKRIDGE INTERNATIONAL
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Singapore and OAKRIDGE is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and OAKRIDGE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OAKRIDGE INTERNATIONAL 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 OAKRIDGE INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OAKRIDGE INTERNATIONAL has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and OAKRIDGE INTERNATIONAL go up and down completely randomly.
Pair Corralation between Singapore Airlines and OAKRIDGE INTERNATIONAL
Assuming the 90 days trading horizon Singapore Airlines is expected to generate 19.21 times less return on investment than OAKRIDGE INTERNATIONAL. But when comparing it to its historical volatility, Singapore Airlines Limited is 10.05 times less risky than OAKRIDGE INTERNATIONAL. It trades about 0.07 of its potential returns per unit of risk. OAKRIDGE INTERNATIONAL is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2.50 in OAKRIDGE INTERNATIONAL on September 4, 2024 and sell it today you would earn a total of 0.65 from holding OAKRIDGE INTERNATIONAL or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Singapore Airlines Limited vs. OAKRIDGE INTERNATIONAL
Performance |
| Timeline |
| Singapore Airlines |
| OAKRIDGE INTERNATIONAL |
Singapore Airlines and OAKRIDGE INTERNATIONAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and OAKRIDGE INTERNATIONAL
The main advantage of trading using opposite Singapore Airlines and OAKRIDGE INTERNATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, OAKRIDGE INTERNATIONAL 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 OAKRIDGE INTERNATIONAL will offset losses from the drop in OAKRIDGE INTERNATIONAL'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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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