Correlation Between SINGAPORE AIRLINES and JAPAN AIRLINES

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

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

Diversification Opportunities for SINGAPORE AIRLINES and JAPAN AIRLINES

0.71

Correlation Coefficient

SINGAPORE AIRLINES  JAPAN AIRLINES

Poor diversification

The 3 months correlation between SINGAPORE and JAPAN is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES 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 JAPAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN AIRLINES has no effect on the direction of SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and JAPAN AIRLINES go up and down completely randomly.

Pair Corralation between SINGAPORE AIRLINES and JAPAN AIRLINES

Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 0.61 times more return on investment than JAPAN AIRLINES. However, SINGAPORE AIRLINES is 1.64 times less risky than JAPAN AIRLINES. It trades about 0.2 of its potential returns per unit of risk. JAPAN AIRLINES is currently generating about 0.06 per unit of risk. If you would invest  441.00  in SINGAPORE AIRLINES on April 24, 2025 and sell it today you would earn a total of  49.00  from holding SINGAPORE AIRLINES or generate 11.11% 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.  JAPAN AIRLINES

SINGAPORE AIRLINES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SINGAPORE AIRLINES are ranked lower than 15 (%) 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.

JAPAN AIRLINES

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN AIRLINES are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, JAPAN AIRLINES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SINGAPORE AIRLINES and JAPAN AIRLINES

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

The idea behind SINGAPORE AIRLINES and JAPAN 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 Global Correlations module to find global opportunities by holding instruments from different markets.