Correlation Between Delta Air and Singapore Airlines

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

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

Diversification Opportunities for Delta Air and Singapore Airlines

-0.82

Correlation Coefficient

Delta Air  Singapore Airlines

Pay attention - limited upside

The 3 months correlation between Delta and Singapore is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and Delta Air 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 Delta Air Lines 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 Delta Air i.e., Delta Air and Singapore Airlines go up and down completely randomly.

Pair Corralation between Delta Air and Singapore Airlines

Considering the 90-day investment horizon Delta Air Lines is expected to under-perform the Singapore Airlines. In addition to that, Delta Air is 3.54 times more volatile than Singapore Airlines. It trades about -0.14 of its total potential returns per unit of risk. Singapore Airlines is currently generating about 0.11 per unit of volatility. If you would invest  952.00  in Singapore Airlines on December 29, 2024 and sell it today you would earn a total of  52.00  from holding Singapore Airlines or generate 5.46% return on investment over 90 days.

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

Delta Air Lines  vs.  Singapore Airlines

Delta Air Lines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Air Lines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Singapore Airlines

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Airlines are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Singapore Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Delta Air and Singapore Airlines

The main advantage of trading using opposite Delta Air and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air 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 Delta Air Lines 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.