Correlation Between SINGAPORE AIRLINES and Scales
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and Scales 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 Scales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and Scales Limited, you can compare the effects of market volatilities on SINGAPORE AIRLINES and Scales 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 Scales. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and Scales.
Diversification Opportunities for SINGAPORE AIRLINES and Scales
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SINGAPORE and Scales is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and Scales Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scales Limited 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 Scales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scales Limited has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and Scales go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and Scales
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 2.22 times less return on investment than Scales. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 2.15 times less risky than Scales. It trades about 0.05 of its potential returns per unit of risk. Scales Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 171.00 in Scales Limited on September 12, 2024 and sell it today you would earn a total of 47.00 from holding Scales Limited or generate 27.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SINGAPORE AIRLINES vs. Scales Limited
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| Scales Limited |
SINGAPORE AIRLINES and Scales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and Scales
The main advantage of trading using opposite SINGAPORE AIRLINES and Scales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES position performs unexpectedly, Scales 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 Scales will offset losses from the drop in Scales' long position.| SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc |
| Scales vs. Ameriprise Financial | Scales vs. OAKTRSPECLENDNEW | Scales vs. REVO INSURANCE SPA | Scales vs. Hollywood Bowl Group |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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