Correlation Between AerSale Corp and Cebu Air
Can any of the company-specific risk be diversified away by investing in both AerSale Corp 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 AerSale Corp and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AerSale Corp and Cebu Air ADR, you can compare the effects of market volatilities on AerSale Corp 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 AerSale Corp with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerSale Corp and Cebu Air.
Diversification Opportunities for AerSale Corp and Cebu Air
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AerSale and Cebu is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp 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 AerSale Corp 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 AerSale Corp 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 AerSale Corp i.e., AerSale Corp and Cebu Air go up and down completely randomly.
Pair Corralation between AerSale Corp and Cebu Air
Given the investment horizon of 90 days AerSale Corp is expected to generate 0.89 times more return on investment than Cebu Air. However, AerSale Corp is 1.13 times less risky than Cebu Air. It trades about 0.27 of its potential returns per unit of risk. Cebu Air ADR is currently generating about -0.22 per unit of risk. If you would invest 553.00 in AerSale Corp on August 28, 2024 and sell it today you would earn a total of 91.00 from holding AerSale Corp or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
AerSale Corp vs. Cebu Air ADR
Performance |
| Timeline |
| AerSale Corp |
| Cebu Air ADR |
AerSale Corp and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AerSale Corp and Cebu Air
The main advantage of trading using opposite AerSale Corp and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerSale Corp 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.| AerSale Corp vs. Grupo Aeroportuario del | AerSale Corp vs. Grupo Aeroportuario del | AerSale Corp vs. Corporacion America Airports | AerSale Corp vs. Aeroports de Paris |
| Cebu Air vs. Marfrig Global Foods | Cebu Air vs. Grocery Outlet Holding | Cebu Air vs. Dalata Hotel Group | Cebu Air vs. Bt Brands |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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