Correlation Between SINGAPORE AIRLINES and Amkor Technology

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

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

Diversification Opportunities for SINGAPORE AIRLINES and Amkor Technology

0.28

Correlation Coefficient

SINGAPORE AIRLINES  Amkor Technology

Modest diversification

The 3 months correlation between SINGAPORE and Amkor is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology 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 Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and Amkor Technology go up and down completely randomly.

Pair Corralation between SINGAPORE AIRLINES and Amkor Technology

Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 1.2 times less return on investment than Amkor Technology. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 2.62 times less risky than Amkor Technology. It trades about 0.02 of its potential returns per unit of risk. Amkor Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,564  in Amkor Technology on September 28, 2024 and sell it today you would lose (149.00) from holding Amkor Technology or give up 5.81% of portfolio value over 90 days.

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

SINGAPORE AIRLINES  vs.  Amkor Technology

SINGAPORE AIRLINES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SINGAPORE AIRLINES has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Amkor Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amkor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SINGAPORE AIRLINES and Amkor Technology

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

The idea behind SINGAPORE AIRLINES and Amkor Technology 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.