Correlation Between SINGAPORE AIRLINES and Auto Trader
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and Auto Trader 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 Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and Auto Trader Group, you can compare the effects of market volatilities on SINGAPORE AIRLINES and Auto Trader 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 Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and Auto Trader.
Diversification Opportunities for SINGAPORE AIRLINES and Auto Trader
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SINGAPORE and Auto is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group 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 are associated (or correlated) with Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and Auto Trader go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and Auto Trader
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 1.48 times less return on investment than Auto Trader. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 1.23 times less risky than Auto Trader. It trades about 0.06 of its potential returns per unit of risk. Auto Trader Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 640.00 in Auto Trader Group on September 4, 2024 and sell it today you would earn a total of 380.00 from holding Auto Trader Group or generate 59.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
SINGAPORE AIRLINES vs. Auto Trader Group
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| Auto Trader Group |
SINGAPORE AIRLINES and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and Auto Trader
The main advantage of trading using opposite SINGAPORE AIRLINES and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| SINGAPORE AIRLINES vs. TOTAL GABON | SINGAPORE AIRLINES vs. Walgreens Boots Alliance | SINGAPORE AIRLINES vs. Peak Resources Limited |
| Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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