Correlation Between SINGAPORE AIRLINES and BP Prudhoe

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

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

Diversification Opportunities for SINGAPORE AIRLINES and BP Prudhoe

-0.58

Correlation Coefficient

SINGAPORE AIRLINES  BP Prudhoe

Excellent diversification

The 3 months correlation between SINGAPORE and BMI is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and BP Prudhoe Bay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP Prudhoe Bay 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 BP Prudhoe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP Prudhoe Bay has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and BP Prudhoe go up and down completely randomly.

Pair Corralation between SINGAPORE AIRLINES and BP Prudhoe

Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 0.07 times more return on investment than BP Prudhoe. However, SINGAPORE AIRLINES is 13.58 times less risky than BP Prudhoe. It trades about 0.1 of its potential returns per unit of risk. BP Prudhoe Bay is currently generating about -0.32 per unit of risk. If you would invest  447.00  in SINGAPORE AIRLINES on October 4, 2024 and sell it today you would earn a total of  5.00  from holding SINGAPORE AIRLINES or generate 1.12% return on investment over 90 days.

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

SINGAPORE AIRLINES  vs.  BP Prudhoe Bay

SINGAPORE AIRLINES

Risk-Adjusted Performance

2 of 100

Weak

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.

BP Prudhoe Bay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BP Prudhoe Bay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SINGAPORE AIRLINES and BP Prudhoe

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

The idea behind SINGAPORE AIRLINES and BP Prudhoe Bay 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.