Correlation Between Cebu Air and Concepcion Industrial
Can any of the company-specific risk be diversified away by investing in both Cebu Air and Concepcion Industrial 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 Cebu Air and Concepcion Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cebu Air Preferred and Concepcion Industrial Corp, you can compare the effects of market volatilities on Cebu Air and Concepcion Industrial 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 Cebu Air with a short position of Concepcion Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Concepcion Industrial.
Diversification Opportunities for Cebu Air and Concepcion Industrial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cebu and Concepcion is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air Preferred and Concepcion Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concepcion Industrial and Cebu Air 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 Cebu Air Preferred are associated (or correlated) with Concepcion Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concepcion Industrial has no effect on the direction of Cebu Air i.e., Cebu Air and Concepcion Industrial go up and down completely randomly.
Pair Corralation between Cebu Air and Concepcion Industrial
Assuming the 90 days trading horizon Cebu Air Preferred is expected to generate 1.87 times more return on investment than Concepcion Industrial. However, Cebu Air is 1.87 times more volatile than Concepcion Industrial Corp. It trades about 0.07 of its potential returns per unit of risk. Concepcion Industrial Corp is currently generating about 0.08 per unit of risk. If you would invest 3,585 in Cebu Air Preferred on October 25, 2024 and sell it today you would earn a total of 70.00 from holding Cebu Air Preferred or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cebu Air Preferred vs. Concepcion Industrial Corp
Performance |
| Timeline |
| Cebu Air Preferred |
| Concepcion Industrial |
Cebu Air and Concepcion Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Concepcion Industrial
The main advantage of trading using opposite Cebu Air and Concepcion Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Concepcion Industrial 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 Concepcion Industrial will offset losses from the drop in Concepcion Industrial's long position.| Cebu Air vs. Lepanto Consolidated Mining | Cebu Air vs. Crown Asia Chemicals | Cebu Air vs. Philippine Business Bank | Cebu Air vs. Jollibee Foods Corp |
| Concepcion Industrial vs. Jollibee Foods Corp | Concepcion Industrial vs. National Reinsurance | Concepcion Industrial vs. Transpacific Broadband Group | Concepcion Industrial vs. Lepanto Consolidated Mining |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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