Correlation Between MEDICAL FACILITIES and Singapore Airlines

Can any of the company-specific risk be diversified away by investing in both MEDICAL FACILITIES 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 MEDICAL FACILITIES and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MEDICAL FACILITIES NEW and Singapore Airlines Limited, you can compare the effects of market volatilities on MEDICAL FACILITIES 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 MEDICAL FACILITIES with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and Singapore Airlines.

Diversification Opportunities for MEDICAL FACILITIES and Singapore Airlines

0.39

Correlation Coefficient

MEDICAL FACILITIES  Singapore Airlines

Weak diversification

The 3 months correlation between MEDICAL and Singapore is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW 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 MEDICAL FACILITIES i.e., MEDICAL FACILITIES and Singapore Airlines go up and down completely randomly.

Pair Corralation between MEDICAL FACILITIES and Singapore Airlines

Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to generate 3.08 times more return on investment than Singapore Airlines. However, MEDICAL FACILITIES is 3.08 times more volatile than Singapore Airlines Limited. It trades about 0.06 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.14 per unit of risk. If you would invest  1,084  in MEDICAL FACILITIES NEW on November 29, 2024 and sell it today you would earn a total of  86.00  from holding MEDICAL FACILITIES NEW or generate 7.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MEDICAL FACILITIES NEW  vs.  Singapore Airlines Limited

MEDICAL FACILITIES NEW

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MEDICAL FACILITIES NEW are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, MEDICAL FACILITIES may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Singapore Airlines

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Airlines Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Singapore Airlines may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with MEDICAL FACILITIES and Singapore Airlines

The main advantage of trading using opposite MEDICAL FACILITIES and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.