Correlation Between Singapore Airlines and ZIJIN MINH

Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and ZIJIN MINH 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 ZIJIN MINH 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 ZIJIN MINH UNSPADR20, you can compare the effects of market volatilities on Singapore Airlines and ZIJIN MINH 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 ZIJIN MINH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and ZIJIN MINH.

Diversification Opportunities for Singapore Airlines and ZIJIN MINH

0.31

Correlation Coefficient

Singapore Airlines  ZIJIN MINH

Weak diversification

The 3 months correlation between Singapore and ZIJIN is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and ZIJIN MINH UNSPADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIJIN MINH UNSPADR20 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 ZIJIN MINH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIJIN MINH UNSPADR20 has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and ZIJIN MINH go up and down completely randomly.

Pair Corralation between Singapore Airlines and ZIJIN MINH

Assuming the 90 days trading horizon Singapore Airlines is expected to generate 9.59 times less return on investment than ZIJIN MINH. But when comparing it to its historical volatility, Singapore Airlines Limited is 2.62 times less risky than ZIJIN MINH. It trades about 0.05 of its potential returns per unit of risk. ZIJIN MINH UNSPADR20 is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,260  in ZIJIN MINH UNSPADR20 on December 28, 2024 and sell it today you would earn a total of  860.00  from holding ZIJIN MINH UNSPADR20 or generate 26.38% return on investment over 90 days.

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

Singapore Airlines Limited  vs.  ZIJIN MINH UNSPADR20

Singapore Airlines

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Airlines Limited are ranked lower than 3 (%) 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ZIJIN MINH UNSPADR20

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZIJIN MINH UNSPADR20 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ZIJIN MINH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singapore Airlines and ZIJIN MINH

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

The idea behind Singapore Airlines Limited and ZIJIN MINH UNSPADR20 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.