Correlation Between Singapore Airlines and Qantas Airways
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and Qantas Airways 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 Qantas Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Airlines and Qantas Airways Limited, you can compare the effects of market volatilities on Singapore Airlines and Qantas Airways 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 Qantas Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and Qantas Airways.
Diversification Opportunities for Singapore Airlines and Qantas Airways
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Singapore and Qantas is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines and Qantas Airways Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and Qantas Airways go up and down completely randomly.
Pair Corralation between Singapore Airlines and Qantas Airways
Assuming the 90 days horizon Singapore Airlines is expected to under-perform the Qantas Airways. In addition to that, Singapore Airlines is 1.0 times more volatile than Qantas Airways Limited. It trades about -0.19 of its total potential returns per unit of risk. Qantas Airways Limited is currently generating about 0.16 per unit of volatility. If you would invest 501.00 in Qantas Airways Limited on August 25, 2024 and sell it today you would earn a total of 39.00 from holding Qantas Airways Limited or generate 7.78% 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. Qantas Airways Limited
Performance |
| Timeline |
| Singapore Airlines |
| Qantas Airways |
Singapore Airlines and Qantas Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and Qantas Airways
The main advantage of trading using opposite Singapore Airlines and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' 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 |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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