Correlation Between Estrella Immunopharma and Singapore Airlines

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

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

Diversification Opportunities for Estrella Immunopharma and Singapore Airlines

0.05

Correlation Coefficient

Estrella Immunopharma  Singapore Airlines

Significant diversification

The 3 months correlation between Estrella and Singapore is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Estrella Immunopharma and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and Estrella Immunopharma 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 Estrella Immunopharma 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 Estrella Immunopharma i.e., Estrella Immunopharma and Singapore Airlines go up and down completely randomly.

Pair Corralation between Estrella Immunopharma and Singapore Airlines

Assuming the 90 days horizon Estrella Immunopharma is expected to generate 5.13 times more return on investment than Singapore Airlines. However, Estrella Immunopharma is 5.13 times more volatile than Singapore Airlines. It trades about 0.09 of its potential returns per unit of risk. Singapore Airlines is currently generating about 0.05 per unit of risk. If you would invest  9.10  in Estrella Immunopharma on December 1, 2024 and sell it today you would lose (0.61) from holding Estrella Immunopharma or give up 6.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	59.57%
Values	Daily Returns

Estrella Immunopharma  vs.  Singapore Airlines

Estrella Immunopharma

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Estrella Immunopharma are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Estrella Immunopharma showed solid returns over the last few months and may actually be approaching a breakup point.

Singapore Airlines

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Airlines are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Singapore Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Estrella Immunopharma and Singapore Airlines

The main advantage of trading using opposite Estrella Immunopharma and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estrella Immunopharma 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 Estrella Immunopharma 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.