Correlation Between SINGAPORE AIRLINES and HEXINDO ADIPERKASA
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and HEXINDO ADIPERKASA, you can compare the effects of market volatilities on SINGAPORE AIRLINES and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and HEXINDO ADIPERKASA.
Diversification Opportunities for SINGAPORE AIRLINES and HEXINDO ADIPERKASA
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SINGAPORE and HEXINDO is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and HEXINDO ADIPERKASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXINDO ADIPERKASA has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and HEXINDO ADIPERKASA go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and HEXINDO ADIPERKASA
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 0.84 times more return on investment than HEXINDO ADIPERKASA. However, SINGAPORE AIRLINES is 1.19 times less risky than HEXINDO ADIPERKASA. It trades about 0.06 of its potential returns per unit of risk. HEXINDO ADIPERKASA is currently generating about 0.02 per unit of risk. If you would invest 371.00 in SINGAPORE AIRLINES on September 15, 2024 and sell it today you would earn a total of 78.00 from holding SINGAPORE AIRLINES or generate 21.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SINGAPORE AIRLINES vs. HEXINDO ADIPERKASA
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| HEXINDO ADIPERKASA |
SINGAPORE AIRLINES and HEXINDO ADIPERKASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and HEXINDO ADIPERKASA
The main advantage of trading using opposite SINGAPORE AIRLINES and HEXINDO ADIPERKASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES position performs unexpectedly, HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA will offset losses from the drop in HEXINDO ADIPERKASA's long position.| SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc |
| HEXINDO ADIPERKASA vs. GREENX METALS LTD | HEXINDO ADIPERKASA vs. SINGAPORE AIRLINES | HEXINDO ADIPERKASA vs. Jacquet Metal Service | HEXINDO ADIPERKASA vs. Kaiser Aluminum |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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