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 SA, 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
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Singapore and Air is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines and Air France KLM SA 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
If you would invest 825.00 in Air France KLM SA on October 22, 2024 and sell it today you would earn a total of 0.00 from holding Air France KLM SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Airlines vs. Air France KLM SA
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. Cathay Pacific Airways | Singapore Airlines vs. Qantas Airways Ltd | Singapore Airlines vs. International Consolidated Airlines | Singapore Airlines vs. Singapore Airlines |
| Air France vs. Cebu Air | Air France vs. easyJet plc | Air France vs. Norse Atlantic ASA | Air France vs. Air China Limited |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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