Correlation Between Steel Dynamics and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Singapore 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 Steel Dynamics and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Singapore Airlines, you can compare the effects of market volatilities on Steel Dynamics and Singapore 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 Steel Dynamics with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Singapore Airlines.
Diversification Opportunities for Steel Dynamics and Singapore Airlines
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and Singapore is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and Steel Dynamics 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 Steel Dynamics are associated (or correlated) with Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Singapore Airlines go up and down completely randomly.
Pair Corralation between Steel Dynamics and Singapore Airlines
Given the investment horizon of 90 days Steel Dynamics is expected to generate 0.91 times more return on investment than Singapore Airlines. However, Steel Dynamics is 1.1 times less risky than Singapore Airlines. It trades about 0.16 of its potential returns per unit of risk. Singapore Airlines is currently generating about -0.1 per unit of risk. If you would invest 13,050 in Steel Dynamics on September 1, 2024 and sell it today you would earn a total of 1,477 from holding Steel Dynamics or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Singapore Airlines
Performance |
| Timeline |
| Steel Dynamics |
| Singapore Airlines |
Steel Dynamics and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Singapore Airlines
The main advantage of trading using opposite Steel Dynamics and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Singapore 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| Steel Dynamics vs. Cleveland Cliffs | Steel Dynamics vs. United States Steel | Steel Dynamics vs. ArcelorMittal SA ADR | Steel Dynamics vs. Reliance Steel Aluminum |
| Singapore Airlines vs. Copa Holdings SA | Singapore Airlines vs. United Airlines Holdings | Singapore Airlines vs. Delta Air Lines | Singapore Airlines vs. SkyWest |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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