Correlation Between Singapore Airlines and Japan Airlines
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and Japan Airlines 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 Japan Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Airlines and Japan Airlines Ltd, you can compare the effects of market volatilities on Singapore Airlines and Japan Airlines 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 Japan Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and Japan Airlines.
Diversification Opportunities for Singapore Airlines and Japan Airlines
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Singapore and Japan is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines and Japan Airlines Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Airlines 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 Japan Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Airlines has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and Japan Airlines go up and down completely randomly.
Pair Corralation between Singapore Airlines and Japan Airlines
Assuming the 90 days horizon Singapore Airlines is expected to generate 1.28 times less return on investment than Japan Airlines. In addition to that, Singapore Airlines is 2.76 times more volatile than Japan Airlines Ltd. It trades about 0.04 of its total potential returns per unit of risk. Japan Airlines Ltd is currently generating about 0.12 per unit of volatility. If you would invest 993.00 in Japan Airlines Ltd on August 29, 2024 and sell it today you would earn a total of 96.00 from holding Japan Airlines Ltd or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 17.49% |
| Values | Daily Returns |
Singapore Airlines vs. Japan Airlines Ltd
Performance |
| Timeline |
| Singapore Airlines |
| Japan Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Singapore Airlines and Japan Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and Japan Airlines
The main advantage of trading using opposite Singapore Airlines and Japan Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, Japan Airlines 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 Japan Airlines will offset losses from the drop in Japan Airlines' 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 |
| Japan Airlines vs. Qantas Airways Limited | Japan Airlines vs. Cathay Pacific Airways | Japan Airlines vs. Singapore Airlines | Japan Airlines vs. Singapore Airlines |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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