Correlation Between SINGAPORE AIRLINES and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and Singapore Telecommunicatio 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 Singapore Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and Singapore Telecommunications Limited, you can compare the effects of market volatilities on SINGAPORE AIRLINES and Singapore Telecommunicatio 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 Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and Singapore Telecommunicatio.
Diversification Opportunities for SINGAPORE AIRLINES and Singapore Telecommunicatio
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SINGAPORE and Singapore is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio 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 Singapore Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Telecommunicatio has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and Singapore Telecommunicatio
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to under-perform the Singapore Telecommunicatio. But the stock apears to be less risky and, when comparing its historical volatility, SINGAPORE AIRLINES is 1.13 times less risky than Singapore Telecommunicatio. The stock trades about -0.08 of its potential returns per unit of risk. The Singapore Telecommunications Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 218.00 in Singapore Telecommunications Limited on August 28, 2024 and sell it today you would lose (3.00) from holding Singapore Telecommunications Limited or give up 1.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SINGAPORE AIRLINES vs. Singapore Telecommunications L
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| Singapore Telecommunicatio |
SINGAPORE AIRLINES and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and Singapore Telecommunicatio
The main advantage of trading using opposite SINGAPORE AIRLINES and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES position performs unexpectedly, Singapore Telecommunicatio 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 Singapore Telecommunicatio will offset losses from the drop in Singapore Telecommunicatio's long position.| SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Microsoft |
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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