Correlation Between SINGAPORE AIRLINES and VULCAN MATERIALS
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and VULCAN MATERIALS 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 VULCAN MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and VULCAN MATERIALS, you can compare the effects of market volatilities on SINGAPORE AIRLINES and VULCAN MATERIALS 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 VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and VULCAN MATERIALS.
Diversification Opportunities for SINGAPORE AIRLINES and VULCAN MATERIALS
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between SINGAPORE and VULCAN is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS 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 VULCAN MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VULCAN MATERIALS has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and VULCAN MATERIALS go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and VULCAN MATERIALS
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 2.75 times less return on investment than VULCAN MATERIALS. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 1.51 times less risky than VULCAN MATERIALS. It trades about 0.04 of its potential returns per unit of risk. VULCAN MATERIALS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 23,507 in VULCAN MATERIALS on September 1, 2024 and sell it today you would earn a total of 3,693 from holding VULCAN MATERIALS or generate 15.71% 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. VULCAN MATERIALS
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| VULCAN MATERIALS |
SINGAPORE AIRLINES and VULCAN MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and VULCAN MATERIALS
The main advantage of trading using opposite SINGAPORE AIRLINES and VULCAN MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES position performs unexpectedly, VULCAN MATERIALS 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 VULCAN MATERIALS will offset losses from the drop in VULCAN MATERIALS's long position.| SINGAPORE AIRLINES vs. MAGNUM MINING EXP | SINGAPORE AIRLINES vs. FIREWEED METALS P | SINGAPORE AIRLINES vs. Alfa Financial Software | SINGAPORE AIRLINES vs. Coeur Mining |
| VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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