Correlation Between Singapore Airlines and HEMISPHERE EGY

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

Diversification Opportunities for Singapore Airlines and HEMISPHERE EGY

0.06

Correlation Coefficient

Singapore Airlines  HEMISPHERE EGY

Significant diversification

The 3 months correlation between Singapore and HEMISPHERE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and HEMISPHERE EGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEMISPHERE EGY 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 HEMISPHERE EGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEMISPHERE EGY has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and HEMISPHERE EGY go up and down completely randomly.

Pair Corralation between Singapore Airlines and HEMISPHERE EGY

Assuming the 90 days trading horizon Singapore Airlines is expected to generate 2.68 times less return on investment than HEMISPHERE EGY. But when comparing it to its historical volatility, Singapore Airlines Limited is 1.09 times less risky than HEMISPHERE EGY. It trades about 0.05 of its potential returns per unit of risk. HEMISPHERE EGY is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  77.00  in HEMISPHERE EGY on October 2, 2024 and sell it today you would earn a total of  43.00  from holding HEMISPHERE EGY or generate 55.84% return on investment over 90 days.

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

Singapore Airlines Limited  vs.  HEMISPHERE EGY

Singapore Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

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

HEMISPHERE EGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEMISPHERE EGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HEMISPHERE EGY is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Singapore Airlines and HEMISPHERE EGY

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

The idea behind Singapore Airlines Limited and HEMISPHERE EGY 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.