Correlation Between SINGAPORE AIRLINES and CARSALESCOM

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

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

Diversification Opportunities for SINGAPORE AIRLINES and CARSALESCOM

-0.4

Correlation Coefficient

SINGAPORE AIRLINES  CARSALESCOM

Very good diversification

The 3 months correlation between SINGAPORE and CARSALESCOM is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and CARSALESCOM go up and down completely randomly.

Pair Corralation between SINGAPORE AIRLINES and CARSALESCOM

Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 1.64 times less return on investment than CARSALESCOM. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 1.28 times less risky than CARSALESCOM. It trades about 0.05 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,375  in CARSALESCOM on October 9, 2024 and sell it today you would earn a total of  845.00  from holding CARSALESCOM or generate 61.45% 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.  CARSALESCOM

SINGAPORE AIRLINES

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SINGAPORE AIRLINES are ranked lower than 3 (%) 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.

CARSALESCOM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARSALESCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CARSALESCOM is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SINGAPORE AIRLINES and CARSALESCOM

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

The idea behind SINGAPORE AIRLINES and CARSALESCOM 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.