Correlation Between Royalty Management and Singapore Airlines

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Can any of the company-specific risk be diversified away by investing in both Royalty Management 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 Royalty Management and Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royalty Management Holding and Singapore Airlines, you can compare the effects of market volatilities on Royalty Management 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 Royalty Management with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royalty Management and Singapore Airlines.

Diversification Opportunities for Royalty Management and Singapore Airlines

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Royalty and Singapore is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Royalty Management Holding and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and Royalty Management 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 Royalty Management Holding 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 Royalty Management i.e., Royalty Management and Singapore Airlines go up and down completely randomly.

Pair Corralation between Royalty Management and Singapore Airlines

Given the investment horizon of 90 days Royalty Management Holding is expected to generate 5.7 times more return on investment than Singapore Airlines. However, Royalty Management is 5.7 times more volatile than Singapore Airlines. It trades about 0.01 of its potential returns per unit of risk. Singapore Airlines is currently generating about -0.01 per unit of risk. If you would invest  106.00  in Royalty Management Holding on October 11, 2024 and sell it today you would lose (3.80) from holding Royalty Management Holding or give up 3.58% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy97.56%
ValuesDaily Returns

Royalty Management Holding  vs.  Singapore Airlines

 Performance 
       Timeline  
Royalty Management 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Royalty Management Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Royalty Management displayed solid returns over the last few months and may actually be approaching a breakup point.
Singapore Airlines 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Singapore Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Royalty Management and Singapore Airlines Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Royalty Management and Singapore Airlines

The main advantage of trading using opposite Royalty Management and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royalty Management 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 Royalty Management Holding 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.
Check out your portfolio center.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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