Correlation Between Singapore Airlines and Canadian Imperial

Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and Canadian Imperial 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 Canadian Imperial 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 Canadian Imperial Bank, you can compare the effects of market volatilities on Singapore Airlines and Canadian Imperial 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 Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and Canadian Imperial.

Diversification Opportunities for Singapore Airlines and Canadian Imperial

-0.59

Correlation Coefficient

Singapore Airlines  Canadian Imperial

Excellent diversification

The 3 months correlation between Singapore and Canadian is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and Canadian Imperial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Imperial Bank 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 Canadian Imperial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Imperial Bank has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and Canadian Imperial go up and down completely randomly.

Pair Corralation between Singapore Airlines and Canadian Imperial

Assuming the 90 days trading horizon Singapore Airlines Limited is expected to generate 0.79 times more return on investment than Canadian Imperial. However, Singapore Airlines Limited is 1.26 times less risky than Canadian Imperial. It trades about 0.07 of its potential returns per unit of risk. Canadian Imperial Bank is currently generating about -0.18 per unit of risk. If you would invest  452.00  in Singapore Airlines Limited on December 25, 2024 and sell it today you would earn a total of  18.00  from holding Singapore Airlines Limited or generate 3.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Singapore Airlines Limited  vs.  Canadian Imperial Bank

Singapore Airlines

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Airlines Limited are ranked lower than 5 (%) 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.

Canadian Imperial Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian Imperial Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Singapore Airlines and Canadian Imperial

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

The idea behind Singapore Airlines Limited and Canadian Imperial Bank 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.