Correlation Between SINGAPORE AIRLINES and JAPAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and JAPAN AIRLINES 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 JAPAN AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and JAPAN AIRLINES, you can compare the effects of market volatilities on SINGAPORE AIRLINES and JAPAN AIRLINES 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 JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and JAPAN AIRLINES.
Diversification Opportunities for SINGAPORE AIRLINES and JAPAN AIRLINES
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SINGAPORE and JAPAN is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES 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 JAPAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN AIRLINES has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and JAPAN AIRLINES go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and JAPAN AIRLINES
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to under-perform the JAPAN AIRLINES. But the stock apears to be less risky and, when comparing its historical volatility, SINGAPORE AIRLINES is 1.32 times less risky than JAPAN AIRLINES. The stock trades about -0.07 of its potential returns per unit of risk. The JAPAN AIRLINES is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,520 in JAPAN AIRLINES on November 2, 2024 and sell it today you would earn a total of 70.00 from holding JAPAN AIRLINES or generate 4.61% 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. JAPAN AIRLINES
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| JAPAN AIRLINES |
SINGAPORE AIRLINES and JAPAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and JAPAN AIRLINES
The main advantage of trading using opposite SINGAPORE AIRLINES and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES position performs unexpectedly, JAPAN AIRLINES 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 JAPAN AIRLINES will offset losses from the drop in JAPAN AIRLINES's long position.| SINGAPORE AIRLINES vs. PURE FOODS TASMANIA | SINGAPORE AIRLINES vs. TRADEDOUBLER AB SK | SINGAPORE AIRLINES vs. US FOODS HOLDING | SINGAPORE AIRLINES vs. Canon Marketing Japan |
| JAPAN AIRLINES vs. MARKET VECTR RETAIL | JAPAN AIRLINES vs. TRADELINK ELECTRON | JAPAN AIRLINES vs. CANON MARKETING JP | JAPAN AIRLINES vs. The Trade Desk |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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