Correlation Between SINGAPORE AIRLINES and PPHE HOTEL

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

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

Diversification Opportunities for SINGAPORE AIRLINES and PPHE HOTEL

0.56

Correlation Coefficient

SINGAPORE AIRLINES  PPHE HOTEL

Very weak diversification

The 3 months correlation between SINGAPORE and PPHE is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP 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 PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and PPHE HOTEL go up and down completely randomly.

Pair Corralation between SINGAPORE AIRLINES and PPHE HOTEL

Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 11.56 times less return on investment than PPHE HOTEL. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 1.36 times less risky than PPHE HOTEL. It trades about 0.03 of its potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,370  in PPHE HOTEL GROUP on October 10, 2024 and sell it today you would earn a total of  330.00  from holding PPHE HOTEL GROUP or generate 24.09% return on investment over 90 days.

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

SINGAPORE AIRLINES  vs.  PPHE HOTEL GROUP

SINGAPORE AIRLINES

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SINGAPORE AIRLINES are ranked lower than 2 (%) 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.

PPHE HOTEL GROUP

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE HOTEL GROUP are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, PPHE HOTEL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SINGAPORE AIRLINES and PPHE HOTEL

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

The idea behind SINGAPORE AIRLINES and PPHE HOTEL GROUP 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.