Correlation Between SINGAPORE AIRLINES and Carsales
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and Carsales 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 Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and CarsalesCom, you can compare the effects of market volatilities on SINGAPORE AIRLINES and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and Carsales.
Diversification Opportunities for SINGAPORE AIRLINES and Carsales
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SINGAPORE and Carsales is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and Carsales go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and Carsales
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 1.16 times less return on investment than Carsales. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 1.61 times less risky than Carsales. It trades about 0.05 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,360 in CarsalesCom on November 7, 2024 and sell it today you would earn a total of 60.00 from holding CarsalesCom or generate 2.54% 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. CarsalesCom
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| CarsalesCom |
SINGAPORE AIRLINES and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and Carsales
The main advantage of trading using opposite SINGAPORE AIRLINES and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' 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 |
| Carsales vs. GALENA MINING LTD | Carsales vs. UNITED UTILITIES GR | Carsales vs. GRIFFIN MINING LTD | Carsales vs. GREENX METALS LTD |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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