Correlation Between Singapore Airlines and Blue World

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Can any of the company-specific risk be diversified away by investing in both Singapore Airlines and Blue World 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 Blue World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Airlines and Blue World Acquisition, you can compare the effects of market volatilities on Singapore Airlines and Blue World 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 Blue World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and Blue World.

Diversification Opportunities for Singapore Airlines and Blue World

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Singapore and Blue is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines and Blue World Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue World Acquisition 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 Blue World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue World Acquisition has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and Blue World go up and down completely randomly.

Pair Corralation between Singapore Airlines and Blue World

Assuming the 90 days horizon Singapore Airlines is expected to generate 0.43 times more return on investment than Blue World. However, Singapore Airlines is 2.34 times less risky than Blue World. It trades about 0.03 of its potential returns per unit of risk. Blue World Acquisition is currently generating about -0.07 per unit of risk. If you would invest  784.00  in Singapore Airlines on October 10, 2024 and sell it today you would earn a total of  150.00  from holding Singapore Airlines or generate 19.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy73.99%
ValuesDaily Returns

Singapore Airlines  vs.  Blue World Acquisition

 Performance 
       Timeline  
Singapore Airlines 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 fairly strong technical and fundamental indicators, Singapore Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Blue World Acquisition 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Blue World Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Blue World is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Singapore Airlines and Blue World Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Singapore Airlines and Blue World

The main advantage of trading using opposite Singapore Airlines and Blue World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines position performs unexpectedly, Blue World 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 Blue World will offset losses from the drop in Blue World's long position.
The idea behind Singapore Airlines and Blue World Acquisition 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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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