Correlation Between EBRO FOODS and SINGAPORE AIRLINES

Can any of the company-specific risk be diversified away by investing in both EBRO FOODS 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 EBRO FOODS and SINGAPORE AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EBRO FOODS and SINGAPORE AIRLINES, you can compare the effects of market volatilities on EBRO FOODS 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 EBRO FOODS with a short position of SINGAPORE AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBRO FOODS and SINGAPORE AIRLINES.

Diversification Opportunities for EBRO FOODS and SINGAPORE AIRLINES

0.48

Correlation Coefficient

EBRO FOODS  SINGAPORE AIRLINES

Very weak diversification

The 3 months correlation between EBRO and SINGAPORE is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding EBRO FOODS and SINGAPORE AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE AIRLINES and EBRO FOODS 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 EBRO FOODS 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 EBRO FOODS i.e., EBRO FOODS and SINGAPORE AIRLINES go up and down completely randomly.

Pair Corralation between EBRO FOODS and SINGAPORE AIRLINES

Assuming the 90 days trading horizon EBRO FOODS is expected to generate 0.87 times more return on investment than SINGAPORE AIRLINES. However, EBRO FOODS is 1.16 times less risky than SINGAPORE AIRLINES. It trades about 0.08 of its potential returns per unit of risk. SINGAPORE AIRLINES is currently generating about 0.07 per unit of risk. If you would invest  1,572  in EBRO FOODS on December 23, 2024 and sell it today you would earn a total of  64.00  from holding EBRO FOODS or generate 4.07% return on investment over 90 days.

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

EBRO FOODS  vs.  SINGAPORE AIRLINES

EBRO FOODS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EBRO FOODS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EBRO FOODS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SINGAPORE AIRLINES

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SINGAPORE AIRLINES are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SINGAPORE AIRLINES is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EBRO FOODS and SINGAPORE AIRLINES

The main advantage of trading using opposite EBRO FOODS and SINGAPORE AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBRO FOODS 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's long position.

The idea behind EBRO FOODS and SINGAPORE AIRLINES 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.