Correlation Between Ping An and SINGAPORE AIRLINES

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

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

Diversification Opportunities for Ping An and SINGAPORE AIRLINES

0.21

Correlation Coefficient

Ping An  SINGAPORE AIRLINES

Modest diversification

The 3 months correlation between Ping and SINGAPORE is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and SINGAPORE AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE AIRLINES and Ping An 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 Ping An Insurance 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 Ping An i.e., Ping An and SINGAPORE AIRLINES go up and down completely randomly.

Pair Corralation between Ping An and SINGAPORE AIRLINES

Assuming the 90 days trading horizon Ping An Insurance is expected to generate 3.11 times more return on investment than SINGAPORE AIRLINES. However, Ping An is 3.11 times more volatile than SINGAPORE AIRLINES. It trades about 0.16 of its potential returns per unit of risk. SINGAPORE AIRLINES is currently generating about 0.05 per unit of risk. If you would invest  401.00  in Ping An Insurance on September 14, 2024 and sell it today you would earn a total of  177.00  from holding Ping An Insurance or generate 44.14% return on investment over 90 days.

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

Ping An Insurance  vs.  SINGAPORE AIRLINES

Ping An Insurance

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ping An unveiled solid returns over the last few months and may actually be approaching a breakup point.

SINGAPORE AIRLINES

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SINGAPORE AIRLINES are ranked lower than 4 (%) 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 Ping An and SINGAPORE AIRLINES

The main advantage of trading using opposite Ping An and SINGAPORE AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An 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 Ping An Insurance 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.