Correlation Between SHIP HEALTHCARE and Singapore Airlines

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

By analyzing existing cross correlation between SHIP HEALTHCARE HLDGINC and Singapore Airlines Limited, you can compare the effects of market volatilities on SHIP HEALTHCARE and Singapore Airlines 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 SHIP HEALTHCARE with a short position of Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIP HEALTHCARE and Singapore Airlines.

Diversification Opportunities for SHIP HEALTHCARE and Singapore Airlines

0.54

Correlation Coefficient

SHIP HEALTHCARE  Singapore Airlines

Very weak diversification

The 3 months correlation between SHIP and Singapore is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines and SHIP HEALTHCARE 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 SHIP HEALTHCARE HLDGINC are associated (or correlated) with Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of SHIP HEALTHCARE i.e., SHIP HEALTHCARE and Singapore Airlines go up and down completely randomly.

Pair Corralation between SHIP HEALTHCARE and Singapore Airlines

Assuming the 90 days horizon SHIP HEALTHCARE is expected to generate 1.25 times less return on investment than Singapore Airlines. In addition to that, SHIP HEALTHCARE is 1.21 times more volatile than Singapore Airlines Limited. It trades about 0.03 of its total potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.05 per unit of volatility. If you would invest  428.00  in Singapore Airlines Limited on September 3, 2024 and sell it today you would earn a total of  14.00  from holding Singapore Airlines Limited or generate 3.27% return on investment over 90 days.

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

SHIP HEALTHCARE HLDGINC  vs.  Singapore Airlines Limited

SHIP HEALTHCARE HLDGINC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SHIP HEALTHCARE HLDGINC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SHIP HEALTHCARE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Singapore Airlines

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Airlines Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Singapore Airlines is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SHIP HEALTHCARE and Singapore Airlines

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

The idea behind SHIP HEALTHCARE HLDGINC and Singapore Airlines Limited 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.