Correlation Between Singapore Airlines and JD Sports

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

By analyzing existing cross correlation between Singapore Airlines and JD Sports Fashion, you can compare the effects of market volatilities on Singapore Airlines and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and JD Sports.

Diversification Opportunities for Singapore Airlines and JD Sports

0.85

Correlation Coefficient

Singapore Airlines  JD Sports

Very poor diversification

The 3 months correlation between Singapore and JDSPY is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and JD Sports go up and down completely randomly.

Pair Corralation between Singapore Airlines and JD Sports

Assuming the 90 days horizon Singapore Airlines is expected to generate 0.35 times more return on investment than JD Sports. However, Singapore Airlines is 2.84 times less risky than JD Sports. It trades about 0.01 of its potential returns per unit of risk. JD Sports Fashion is currently generating about 0.0 per unit of risk. If you would invest  914.00  in Singapore Airlines on October 9, 2024 and sell it today you would earn a total of  23.00  from holding Singapore Airlines or generate 2.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Singapore Airlines  vs.  JD Sports Fashion

Singapore Airlines

Risk-Adjusted Performance

0 of 100

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.

JD Sports Fashion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Singapore Airlines and JD Sports

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

The idea behind Singapore Airlines and JD Sports Fashion 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.