Correlation Between SINGAPORE AIRLINES and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and FAST RETAIL 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 FAST RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and FAST RETAIL ADR, you can compare the effects of market volatilities on SINGAPORE AIRLINES and FAST RETAIL 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 FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and FAST RETAIL.
Diversification Opportunities for SINGAPORE AIRLINES and FAST RETAIL
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SINGAPORE and FAST is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR 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 FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and FAST RETAIL go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and FAST RETAIL
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 3.81 times less return on investment than FAST RETAIL. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 1.44 times less risky than FAST RETAIL. It trades about 0.06 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,760 in FAST RETAIL ADR on September 12, 2024 and sell it today you would earn a total of 580.00 from holding FAST RETAIL ADR or generate 21.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SINGAPORE AIRLINES vs. FAST RETAIL ADR
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| FAST RETAIL ADR |
SINGAPORE AIRLINES and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and FAST RETAIL
The main advantage of trading using opposite SINGAPORE AIRLINES and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES position performs unexpectedly, FAST RETAIL 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 FAST RETAIL will offset losses from the drop in FAST RETAIL's long position.| SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc |
| FAST RETAIL vs. CCC SA | FAST RETAIL vs. AOYAMA TRADING | FAST RETAIL vs. Superior Plus Corp | FAST RETAIL vs. SIVERS SEMICONDUCTORS AB |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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