Correlation Between SINGAPORE AIRLINES and China Shengmu
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and China Shengmu 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 China Shengmu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and China Shengmu Organic, you can compare the effects of market volatilities on SINGAPORE AIRLINES and China Shengmu 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 China Shengmu. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and China Shengmu.
Diversification Opportunities for SINGAPORE AIRLINES and China Shengmu
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between SINGAPORE and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and China Shengmu Organic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Shengmu Organic 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 China Shengmu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Shengmu Organic has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and China Shengmu go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and China Shengmu
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 0.59 times more return on investment than China Shengmu. However, SINGAPORE AIRLINES is 1.7 times less risky than China Shengmu. It trades about 0.23 of its potential returns per unit of risk. China Shengmu Organic is currently generating about -0.12 per unit of risk. If you would invest 427.00 in SINGAPORE AIRLINES on September 13, 2024 and sell it today you would earn a total of 21.00 from holding SINGAPORE AIRLINES or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SINGAPORE AIRLINES vs. China Shengmu Organic
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| China Shengmu Organic |
SINGAPORE AIRLINES and China Shengmu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and China Shengmu
The main advantage of trading using opposite SINGAPORE AIRLINES and China Shengmu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES position performs unexpectedly, China Shengmu 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 China Shengmu will offset losses from the drop in China Shengmu's long position.| SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc |
| China Shengmu vs. Apple Inc | China Shengmu vs. Apple Inc | China Shengmu vs. Apple Inc | China Shengmu 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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