Correlation Between Singapore Airlines and FLOW TRADERS

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

Diversification Opportunities for Singapore Airlines and FLOW TRADERS

0.4

Correlation Coefficient

Singapore Airlines  FLOW TRADERS

Very weak diversification

The 3 months correlation between Singapore and FLOW is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and FLOW TRADERS go up and down completely randomly.

Pair Corralation between Singapore Airlines and FLOW TRADERS

Assuming the 90 days trading horizon Singapore Airlines is expected to generate 13.96 times less return on investment than FLOW TRADERS. But when comparing it to its historical volatility, Singapore Airlines Limited is 1.47 times less risky than FLOW TRADERS. It trades about 0.01 of its potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,124  in FLOW TRADERS LTD on October 25, 2024 and sell it today you would earn a total of  232.00  from holding FLOW TRADERS LTD or generate 10.92% return on investment over 90 days.

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

Singapore Airlines Limited  vs.  FLOW TRADERS LTD

Singapore Airlines

Risk-Adjusted Performance

0 of 100

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.

FLOW TRADERS LTD

Risk-Adjusted Performance

9 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FLOW TRADERS LTD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FLOW TRADERS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Singapore Airlines and FLOW TRADERS

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

The idea behind Singapore Airlines Limited and FLOW TRADERS LTD 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 Anywhere module to track or share privately all of your investments from the convenience of any device.