Correlation Between SINGAPORE AIRLINES and Charter Communications

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

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

Diversification Opportunities for SINGAPORE AIRLINES and Charter Communications

-0.09

Correlation Coefficient

SINGAPORE AIRLINES  Charter Communications

Good diversification

The 3 months correlation between SINGAPORE and Charter is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and Charter Communications go up and down completely randomly.

Pair Corralation between SINGAPORE AIRLINES and Charter Communications

Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 2.35 times less return on investment than Charter Communications. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 3.17 times less risky than Charter Communications. It trades about 0.08 of its potential returns per unit of risk. Charter Communications is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  30,760  in Charter Communications on October 23, 2024 and sell it today you would earn a total of  2,755  from holding Charter Communications or generate 8.96% 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.  Charter Communications

SINGAPORE AIRLINES

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SINGAPORE AIRLINES are ranked lower than 6 (%) 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.

Charter Communications

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SINGAPORE AIRLINES and Charter Communications

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

The idea behind SINGAPORE AIRLINES and Charter Communications 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.