Correlation Between HEMISPHERE EGY and Singapore Airlines

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

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

Diversification Opportunities for HEMISPHERE EGY and Singapore Airlines

0.06

Correlation Coefficient

HEMISPHERE EGY  Singapore Airlines

Significant diversification

The 3 months correlation between HEMISPHERE and Singapore is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding HEMISPHERE EGY and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and HEMISPHERE EGY 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 HEMISPHERE EGY 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 HEMISPHERE EGY i.e., HEMISPHERE EGY and Singapore Airlines go up and down completely randomly.

Pair Corralation between HEMISPHERE EGY and Singapore Airlines

Assuming the 90 days trading horizon HEMISPHERE EGY is expected to generate 1.09 times more return on investment than Singapore Airlines. However, HEMISPHERE EGY is 1.09 times more volatile than Singapore Airlines Limited. It trades about 0.13 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.05 per unit of risk. If you would invest  77.00  in HEMISPHERE EGY on October 2, 2024 and sell it today you would earn a total of  43.00  from holding HEMISPHERE EGY or generate 55.84% return on investment over 90 days.

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

HEMISPHERE EGY  vs.  Singapore Airlines Limited

HEMISPHERE EGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEMISPHERE EGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HEMISPHERE EGY is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Singapore Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Singapore Airlines Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Singapore Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HEMISPHERE EGY and Singapore Airlines

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

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.