Correlation Between SINGAPORE AIRLINES and Wüstenrot Württembergische

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

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

Diversification Opportunities for SINGAPORE AIRLINES and Wüstenrot Württembergische

0.59

Correlation Coefficient

SINGAPORE AIRLINES  Wüstenrot Württembergische

Very weak diversification

The 3 months correlation between SINGAPORE and Wüstenrot is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and Wstenrot Wrttembergische AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wüstenrot Württembergische 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 Wüstenrot Württembergische. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wüstenrot Württembergische has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and Wüstenrot Württembergische go up and down completely randomly.

Pair Corralation between SINGAPORE AIRLINES and Wüstenrot Württembergische

Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 5.57 times less return on investment than Wüstenrot Württembergische. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 1.15 times less risky than Wüstenrot Württembergische. It trades about 0.06 of its potential returns per unit of risk. Wstenrot Wrttembergische AG is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,154  in Wstenrot Wrttembergische AG on December 25, 2024 and sell it today you would earn a total of  234.00  from holding Wstenrot Wrttembergische AG or generate 20.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

SINGAPORE AIRLINES  vs.  Wstenrot Wrttembergische AG

SINGAPORE AIRLINES

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SINGAPORE AIRLINES are ranked lower than 4 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Wüstenrot Württembergische

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wstenrot Wrttembergische AG are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wüstenrot Württembergische unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SINGAPORE AIRLINES and Wüstenrot Württembergische

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

The idea behind SINGAPORE AIRLINES and Wstenrot Wrttembergische AG 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.