Correlation Between SINGAPORE AIRLINES and China Communications
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and China Communications 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 Communications 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 Communications Services, you can compare the effects of market volatilities on SINGAPORE AIRLINES and China Communications 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 Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and China Communications.
Diversification Opportunities for SINGAPORE AIRLINES and China Communications
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SINGAPORE and China is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications 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 Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and China Communications go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and China Communications
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to under-perform the China Communications. But the stock apears to be less risky and, when comparing its historical volatility, SINGAPORE AIRLINES is 1.79 times less risky than China Communications. The stock trades about -0.06 of its potential returns per unit of risk. The China Communications Services is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 51.00 in China Communications Services on October 11, 2024 and sell it today you would earn a total of 0.00 from holding China Communications Services or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SINGAPORE AIRLINES vs. China Communications Services
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| China Communications |
SINGAPORE AIRLINES and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and China Communications
The main advantage of trading using opposite SINGAPORE AIRLINES and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES position performs unexpectedly, China Communications 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 Communications will offset losses from the drop in China Communications' long position.| SINGAPORE AIRLINES vs. Titan Machinery | SINGAPORE AIRLINES vs. Nufarm Limited | SINGAPORE AIRLINES vs. Endeavour Mining PLC | SINGAPORE AIRLINES vs. WIMFARM SA EO |
| China Communications vs. SINGAPORE AIRLINES | China Communications vs. Aegean Airlines SA | China Communications vs. JIAHUA STORES | China Communications vs. Nok Airlines PCL |
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 Stocks Directory module to find actively traded stocks across global markets.
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