Correlation Between SINGAPORE AIRLINES and InterContinental

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

By analyzing existing cross correlation between SINGAPORE AIRLINES and InterContinental Hotels Group, you can compare the effects of market volatilities on SINGAPORE AIRLINES and InterContinental 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 InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and InterContinental.

Diversification Opportunities for SINGAPORE AIRLINES and InterContinental

0.64

Correlation Coefficient

SINGAPORE AIRLINES  InterContinental

Poor diversification

The 3 months correlation between SINGAPORE and InterContinental is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and InterContinental go up and down completely randomly.

Pair Corralation between SINGAPORE AIRLINES and InterContinental

Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 0.5 times more return on investment than InterContinental. However, SINGAPORE AIRLINES is 2.01 times less risky than InterContinental. It trades about 0.19 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.08 per unit of risk. If you would invest  444.00  in SINGAPORE AIRLINES on April 25, 2025 and sell it today you would earn a total of  46.00  from holding SINGAPORE AIRLINES or generate 10.36% return on investment over 90 days.

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

SINGAPORE AIRLINES  vs.  InterContinental Hotels Group

SINGAPORE AIRLINES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SINGAPORE AIRLINES are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SINGAPORE AIRLINES may actually be approaching a critical reversion point that can send shares even higher in August 2025.

InterContinental Hotels

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in InterContinental Hotels Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, InterContinental may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with SINGAPORE AIRLINES and InterContinental

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

The idea behind SINGAPORE AIRLINES and InterContinental Hotels Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.