Correlation Between Singapore Airlines and AutoZone

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

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

Diversification Opportunities for Singapore Airlines and AutoZone

0.56

Correlation Coefficient

Singapore Airlines  AutoZone

Very weak diversification

The 3 months correlation between Singapore and AutoZone is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Singapore Airlines 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 Singapore Airlines Limited are associated (or correlated) with AutoZone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and AutoZone go up and down completely randomly.

Pair Corralation between Singapore Airlines and AutoZone

Assuming the 90 days trading horizon Singapore Airlines is expected to generate 9.14 times less return on investment than AutoZone. But when comparing it to its historical volatility, Singapore Airlines Limited is 1.29 times less risky than AutoZone. It trades about 0.02 of its potential returns per unit of risk. AutoZone is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  287,800  in AutoZone on October 26, 2024 and sell it today you would earn a total of  33,600  from holding AutoZone or generate 11.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Singapore Airlines Limited  vs.  AutoZone

Singapore Airlines

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Airlines Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

AutoZone

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AutoZone may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Singapore Airlines and AutoZone

The main advantage of trading using opposite Singapore Airlines and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, AutoZone 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 AutoZone will offset losses from the drop in AutoZone's long position.

The idea behind Singapore Airlines Limited and AutoZone 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.