Correlation Between Singapore Airlines and Air France
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and Air France 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 France 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 France KLM, you can compare the effects of market volatilities on Singapore Airlines and Air France 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 France. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and Air France.
Diversification Opportunities for Singapore Airlines and Air France
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Singapore and Air is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines and Air France KLM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air France KLM 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 France. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air France KLM has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and Air France go up and down completely randomly.
Pair Corralation between Singapore Airlines and Air France
Assuming the 90 days horizon Singapore Airlines is expected to generate 0.32 times more return on investment than Air France. However, Singapore Airlines is 3.12 times less risky than Air France. It trades about -0.27 of its potential returns per unit of risk. Air France KLM is currently generating about -0.19 per unit of risk. If you would invest 1,049 in Singapore Airlines on August 29, 2024 and sell it today you would lose (110.00) from holding Singapore Airlines or give up 10.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Airlines vs. Air France KLM
Performance |
| Timeline |
| Singapore Airlines |
| Air France KLM |
Singapore Airlines and Air France Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and Air France
The main advantage of trading using opposite Singapore Airlines and Air France positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, Air France 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 France will offset losses from the drop in Air France's long position.| Singapore Airlines vs. Finnair Oyj | Singapore Airlines vs. easyJet plc | Singapore Airlines vs. Norse Atlantic ASA | Singapore Airlines vs. Air China Limited |
| Air France vs. Deere Company | Air France vs. Columbus McKinnon | Air France vs. Hyster Yale Materials Handling | Air France vs. Manitowoc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |