Correlation Between Sunny Optical and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Sunny Optical 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 Sunny Optical and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Optical Technology and Singapore Airlines Limited, you can compare the effects of market volatilities on Sunny Optical 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 Sunny Optical with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Singapore Airlines.
Diversification Opportunities for Sunny Optical and Singapore Airlines
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sunny and Singapore is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and Sunny Optical 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 Sunny Optical Technology 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 Sunny Optical i.e., Sunny Optical and Singapore Airlines go up and down completely randomly.
Pair Corralation between Sunny Optical and Singapore Airlines
Assuming the 90 days horizon Sunny Optical is expected to generate 4.22 times less return on investment than Singapore Airlines. In addition to that, Sunny Optical is 2.56 times more volatile than Singapore Airlines Limited. It trades about 0.01 of its total potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.06 per unit of volatility. If you would invest 331.00 in Singapore Airlines Limited on August 29, 2024 and sell it today you would earn a total of 117.00 from holding Singapore Airlines Limited or generate 35.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. Singapore Airlines Limited
Performance |
| Timeline |
| Sunny Optical Technology |
| Singapore Airlines |
Sunny Optical and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Singapore Airlines
The main advantage of trading using opposite Sunny Optical and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical 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.The idea behind Sunny Optical Technology and Singapore Airlines Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Singapore Airlines vs. PennyMac Mortgage Investment | Singapore Airlines vs. CosmoSteel Holdings Limited | Singapore Airlines vs. Gladstone Investment | Singapore Airlines vs. Insteel Industries |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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