Correlation Between Singapore Airlines and National CineMedia

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

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

Diversification Opportunities for Singapore Airlines and National CineMedia

0.29

Correlation Coefficient

Singapore Airlines  National CineMedia

Modest diversification

The 3 months correlation between Singapore and National is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of Singapore Airlines i.e., Singapore Airlines and National CineMedia go up and down completely randomly.

Pair Corralation between Singapore Airlines and National CineMedia

Assuming the 90 days horizon Singapore Airlines is expected to under-perform the National CineMedia. But the pink sheet apears to be less risky and, when comparing its historical volatility, Singapore Airlines is 3.07 times less risky than National CineMedia. The pink sheet trades about -0.05 of its potential returns per unit of risk. The National CineMedia is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  720.00  in National CineMedia on October 27, 2024 and sell it today you would lose (30.00) from holding National CineMedia or give up 4.17% of portfolio value over 90 days.

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

Singapore Airlines  vs.  National CineMedia

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.

National CineMedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National CineMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, National CineMedia is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Singapore Airlines and National CineMedia

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

The idea behind Singapore Airlines and National CineMedia 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.