Correlation Between Singapore Airlines and ON SEMICONDUCTOR
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR 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 ON SEMICONDUCTOR, you can compare the effects of market volatilities on Singapore Airlines and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and ON SEMICONDUCTOR.
Diversification Opportunities for Singapore Airlines and ON SEMICONDUCTOR
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Singapore and XS4 is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and ON SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON SEMICONDUCTOR 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 ON SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON SEMICONDUCTOR has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and ON SEMICONDUCTOR go up and down completely randomly.
Pair Corralation between Singapore Airlines and ON SEMICONDUCTOR
Assuming the 90 days trading horizon Singapore Airlines Limited is expected to under-perform the ON SEMICONDUCTOR. But the stock apears to be less risky and, when comparing its historical volatility, Singapore Airlines Limited is 1.89 times less risky than ON SEMICONDUCTOR. The stock trades about -0.04 of its potential returns per unit of risk. The ON SEMICONDUCTOR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,404 in ON SEMICONDUCTOR on September 28, 2024 and sell it today you would lose (48.00) from holding ON SEMICONDUCTOR or give up 0.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Singapore Airlines Limited vs. ON SEMICONDUCTOR
Performance |
Timeline |
Singapore Airlines |
ON SEMICONDUCTOR |
Singapore Airlines and ON SEMICONDUCTOR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Singapore Airlines and ON SEMICONDUCTOR
The main advantage of trading using opposite Singapore Airlines and ON SEMICONDUCTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, ON SEMICONDUCTOR 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 ON SEMICONDUCTOR will offset losses from the drop in ON SEMICONDUCTOR's long position.Singapore Airlines vs. CHINA EDUCATION GROUP | Singapore Airlines vs. Xinhua Winshare Publishing | Singapore Airlines vs. Astral Foods Limited | Singapore Airlines vs. Tyson Foods |
Check out your portfolio center.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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