Correlation Between SOFI TECHNOLOGIES and SINGAPORE AIRLINES

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

By analyzing existing cross correlation between SOFI TECHNOLOGIES and SINGAPORE AIRLINES, you can compare the effects of market volatilities on SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES with a short position of SINGAPORE AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFI TECHNOLOGIES and SINGAPORE AIRLINES.

Diversification Opportunities for SOFI TECHNOLOGIES and SINGAPORE AIRLINES

-0.13

Correlation Coefficient

SOFI TECHNOLOGIES  SINGAPORE AIRLINES

Good diversification

The 3 months correlation between SOFI and SINGAPORE is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding SOFI TECHNOLOGIES and SINGAPORE AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE AIRLINES and SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES i.e., SOFI TECHNOLOGIES and SINGAPORE AIRLINES go up and down completely randomly.

Pair Corralation between SOFI TECHNOLOGIES and SINGAPORE AIRLINES

Assuming the 90 days horizon SOFI TECHNOLOGIES is expected to generate 3.19 times more return on investment than SINGAPORE AIRLINES. However, SOFI TECHNOLOGIES is 3.19 times more volatile than SINGAPORE AIRLINES. It trades about 0.34 of its potential returns per unit of risk. SINGAPORE AIRLINES is currently generating about -0.04 per unit of risk. If you would invest  704.00  in SOFI TECHNOLOGIES on September 28, 2024 and sell it today you would earn a total of  767.00  from holding SOFI TECHNOLOGIES or generate 108.95% return on investment over 90 days.

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

SOFI TECHNOLOGIES  vs.  SINGAPORE AIRLINES

SOFI TECHNOLOGIES

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SOFI TECHNOLOGIES are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOFI TECHNOLOGIES reported solid returns over the last few months and may actually be approaching a breakup point.

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 comparatively stable basic indicators, SINGAPORE AIRLINES is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SOFI TECHNOLOGIES and SINGAPORE AIRLINES

The main advantage of trading using opposite SOFI TECHNOLOGIES and SINGAPORE AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFI TECHNOLOGIES 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's long position.

The idea behind SOFI TECHNOLOGIES and SINGAPORE AIRLINES 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..