Correlation Between Air Products and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Air Products and Cebu Air 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 Air Products and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and Cebu Air ADR, you can compare the effects of market volatilities on Air Products and Cebu Air 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 Air Products with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Cebu Air.
Diversification Opportunities for Air Products and Cebu Air
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Cebu is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Cebu Air ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air ADR and Air Products 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 Air Products and are associated (or correlated) with Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air ADR has no effect on the direction of Air Products i.e., Air Products and Cebu Air go up and down completely randomly.
Pair Corralation between Air Products and Cebu Air
Considering the 90-day investment horizon Air Products and is expected to generate 0.38 times more return on investment than Cebu Air. However, Air Products and is 2.6 times less risky than Cebu Air. It trades about 0.07 of its potential returns per unit of risk. Cebu Air ADR is currently generating about -0.03 per unit of risk. If you would invest 25,514 in Air Products and on September 2, 2024 and sell it today you would earn a total of 7,919 from holding Air Products and or generate 31.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Air Products and vs. Cebu Air ADR
Performance |
| Timeline |
| Air Products |
| Cebu Air ADR |
Air Products and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Cebu Air
The main advantage of trading using opposite Air Products and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Cebu Air 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 Cebu Air will offset losses from the drop in Cebu Air's long position.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
| Cebu Air vs. Fidus Investment Corp | Cebu Air vs. 51Talk Online Education | Cebu Air vs. Nexstar Broadcasting Group | Cebu Air vs. Evolution Gaming Group |
Check out your portfolio center.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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