Correlation Between SINGAPORE AIRLINES and OVERSEA CHINUNSPADR/2
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR/2 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and OVERSEA CHINUNSPADR2, you can compare the effects of market volatilities on SINGAPORE AIRLINES and OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR/2. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and OVERSEA CHINUNSPADR/2.
Diversification Opportunities for SINGAPORE AIRLINES and OVERSEA CHINUNSPADR/2
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SINGAPORE and OVERSEA is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and OVERSEA CHINUNSPADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR/2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OVERSEA CHINUNSPADR/2 has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and OVERSEA CHINUNSPADR/2 go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and OVERSEA CHINUNSPADR/2
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to under-perform the OVERSEA CHINUNSPADR/2. But the stock apears to be less risky and, when comparing its historical volatility, SINGAPORE AIRLINES is 1.63 times less risky than OVERSEA CHINUNSPADR/2. The stock trades about -0.07 of its potential returns per unit of risk. The OVERSEA CHINUNSPADR2 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,340 in OVERSEA CHINUNSPADR2 on November 6, 2024 and sell it today you would earn a total of 100.00 from holding OVERSEA CHINUNSPADR2 or generate 4.27% 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. OVERSEA CHINUNSPADR2
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| OVERSEA CHINUNSPADR/2 |
SINGAPORE AIRLINES and OVERSEA CHINUNSPADR/2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and OVERSEA CHINUNSPADR/2
The main advantage of trading using opposite SINGAPORE AIRLINES and OVERSEA CHINUNSPADR/2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES position performs unexpectedly, OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR/2 will offset losses from the drop in OVERSEA CHINUNSPADR/2's long position.| SINGAPORE AIRLINES vs. Choice Hotels International | SINGAPORE AIRLINES vs. REVO INSURANCE SPA | SINGAPORE AIRLINES vs. BRAEMAR HOTELS RES | SINGAPORE AIRLINES vs. Commonwealth Bank of |
| OVERSEA CHINUNSPADR/2 vs. DFS Furniture PLC | OVERSEA CHINUNSPADR/2 vs. Apollo Medical Holdings | OVERSEA CHINUNSPADR/2 vs. CREO MEDICAL GRP | OVERSEA CHINUNSPADR/2 vs. Diamyd Medical 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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