Correlation Between Grupo Aeroportuario and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Grupo Aeroportuario 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 Grupo Aeroportuario and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aeroportuario del and Cebu Air ADR, you can compare the effects of market volatilities on Grupo Aeroportuario 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 Grupo Aeroportuario with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aeroportuario and Cebu Air.
Diversification Opportunities for Grupo Aeroportuario and Cebu Air
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grupo and Cebu is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aeroportuario del 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 Grupo Aeroportuario 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 Grupo Aeroportuario del 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 Grupo Aeroportuario i.e., Grupo Aeroportuario and Cebu Air go up and down completely randomly.
Pair Corralation between Grupo Aeroportuario and Cebu Air
Considering the 90-day investment horizon Grupo Aeroportuario del is expected to generate 0.54 times more return on investment than Cebu Air. However, Grupo Aeroportuario del is 1.84 times less risky than Cebu Air. It trades about 0.04 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 22,702 in Grupo Aeroportuario del on August 26, 2024 and sell it today you would earn a total of 3,788 from holding Grupo Aeroportuario del or generate 16.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Aeroportuario del vs. Cebu Air ADR
Performance |
| Timeline |
| Grupo Aeroportuario del |
| Cebu Air ADR |
Grupo Aeroportuario and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aeroportuario and Cebu Air
The main advantage of trading using opposite Grupo Aeroportuario and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aeroportuario 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.| Grupo Aeroportuario vs. Grupo Aeroportuario del | Grupo Aeroportuario vs. Corporacion America Airports | Grupo Aeroportuario vs. AerSale Corp | Grupo Aeroportuario vs. Flughafen Zrich AG |
| Cebu Air vs. Air China Limited | Cebu Air vs. Air France KLM SA | Cebu Air vs. AirAsia Group Berhad | Cebu Air vs. China Southern Airlines |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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