Correlation Between Singapore Airlines and Air New
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and Air New 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 Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Airlines and Air New Zealand, you can compare the effects of market volatilities on Singapore Airlines and Air New 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 Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and Air New.
Diversification Opportunities for Singapore Airlines and Air New
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Singapore and Air is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and Air New go up and down completely randomly.
Pair Corralation between Singapore Airlines and Air New
Assuming the 90 days horizon Singapore Airlines is expected to generate 0.88 times more return on investment than Air New. However, Singapore Airlines is 1.13 times less risky than Air New. It trades about 0.04 of its potential returns per unit of risk. Air New Zealand is currently generating about -0.01 per unit of risk. If you would invest 412.00 in Singapore Airlines on August 25, 2024 and sell it today you would earn a total of 60.00 from holding Singapore Airlines or generate 14.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Singapore Airlines vs. Air New Zealand
Performance |
| Timeline |
| Singapore Airlines |
| Air New Zealand |
Singapore Airlines and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and Air New
The main advantage of trading using opposite Singapore Airlines and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.| Singapore Airlines vs. Cathay Pacific Airways | Singapore Airlines vs. International Consolidated Airlines | Singapore Airlines vs. Air France KLM | Singapore Airlines vs. Qantas Airways Ltd |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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