Correlation Between Singapore Airlines and PT Steel

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

Diversification Opportunities for Singapore Airlines and PT Steel

0.0

Correlation Coefficient

Singapore Airlines  PT Steel

Pay attention - limited upside

The 3 months correlation between Singapore and S08 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and PT Steel Pipe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Steel Pipe 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 PT Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Steel Pipe has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and PT Steel go up and down completely randomly.

Pair Corralation between Singapore Airlines and PT Steel

Assuming the 90 days trading horizon Singapore Airlines is expected to generate 17.23 times less return on investment than PT Steel. But when comparing it to its historical volatility, Singapore Airlines Limited is 14.41 times less risky than PT Steel. It trades about 0.11 of its potential returns per unit of risk. PT Steel Pipe is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.25  in PT Steel Pipe on October 9, 2024 and sell it today you would earn a total of  0.20  from holding PT Steel Pipe or generate 16.0% return on investment over 90 days.

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

Singapore Airlines Limited  vs.  PT Steel Pipe

Singapore Airlines

Risk-Adjusted Performance

3 of 100

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

PT Steel Pipe

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Steel Pipe are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Steel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singapore Airlines and PT Steel

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

The idea behind Singapore Airlines Limited and PT Steel Pipe 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.