Correlation Between SINGAPORE AIRLINES and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and Sunstone Hotel 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 Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and Sunstone Hotel Investors, you can compare the effects of market volatilities on SINGAPORE AIRLINES and Sunstone Hotel 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 Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and Sunstone Hotel.
Diversification Opportunities for SINGAPORE AIRLINES and Sunstone Hotel
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between SINGAPORE and Sunstone is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and Sunstone Hotel Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunstone Hotel Investors 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 Sunstone Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunstone Hotel Investors has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and Sunstone Hotel go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and Sunstone Hotel
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 4.83 times less return on investment than Sunstone Hotel. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 1.99 times less risky than Sunstone Hotel. It trades about 0.07 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 935.00 in Sunstone Hotel Investors on September 2, 2024 and sell it today you would earn a total of 65.00 from holding Sunstone Hotel Investors or generate 6.95% 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. Sunstone Hotel Investors
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| Sunstone Hotel Investors |
SINGAPORE AIRLINES and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and Sunstone Hotel
The main advantage of trading using opposite SINGAPORE AIRLINES and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES position performs unexpectedly, Sunstone Hotel 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 Sunstone Hotel will offset losses from the drop in Sunstone Hotel's long position.| SINGAPORE AIRLINES vs. SIVERS SEMICONDUCTORS AB | SINGAPORE AIRLINES vs. Darden Restaurants | SINGAPORE AIRLINES vs. Reliance Steel Aluminum | SINGAPORE AIRLINES vs. Q2M Managementberatung AG |
| Sunstone Hotel vs. Nippon Steel | Sunstone Hotel vs. VIAPLAY GROUP AB | Sunstone Hotel vs. ALGOMA STEEL GROUP | Sunstone Hotel vs. Perma Fix Environmental Services |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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