Correlation Between SINGAPORE AIRLINES and Lion Biotechnologies

Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES and Lion Biotechnologies 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 Lion Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SINGAPORE AIRLINES and Lion Biotechnologies, you can compare the effects of market volatilities on SINGAPORE AIRLINES and Lion Biotechnologies 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 Lion Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and Lion Biotechnologies.

Diversification Opportunities for SINGAPORE AIRLINES and Lion Biotechnologies

-0.34

Correlation Coefficient

SINGAPORE AIRLINES  Lion Biotechnologies

Very good diversification

The 3 months correlation between SINGAPORE and Lion is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies 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 are associated (or correlated) with Lion Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and Lion Biotechnologies go up and down completely randomly.

Pair Corralation between SINGAPORE AIRLINES and Lion Biotechnologies

Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 4.84 times less return on investment than Lion Biotechnologies. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 5.46 times less risky than Lion Biotechnologies. It trades about 0.06 of its potential returns per unit of risk. Lion Biotechnologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  504.00  in Lion Biotechnologies on September 21, 2024 and sell it today you would earn a total of  209.00  from holding Lion Biotechnologies or generate 41.47% return on investment over 90 days.

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

SINGAPORE AIRLINES  vs.  Lion Biotechnologies

SINGAPORE AIRLINES

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SINGAPORE AIRLINES are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SINGAPORE AIRLINES is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Lion Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SINGAPORE AIRLINES and Lion Biotechnologies

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

The idea behind SINGAPORE AIRLINES and Lion Biotechnologies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.