Correlation Between Cebu Air and GT Capital
Can any of the company-specific risk be diversified away by investing in both Cebu Air and GT Capital 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 GT Capital 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 GT Capital Holdings, you can compare the effects of market volatilities on Cebu Air and GT Capital 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 GT Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and GT Capital.
Diversification Opportunities for Cebu Air and GT Capital
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cebu and GTCAP is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air Preferred and GT Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Capital Holdings 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 GT Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Capital Holdings has no effect on the direction of Cebu Air i.e., Cebu Air and GT Capital go up and down completely randomly.
Pair Corralation between Cebu Air and GT Capital
Assuming the 90 days trading horizon Cebu Air Preferred is expected to generate 1.13 times more return on investment than GT Capital. However, Cebu Air is 1.13 times more volatile than GT Capital Holdings. It trades about 0.03 of its potential returns per unit of risk. GT Capital Holdings is currently generating about -0.12 per unit of risk. If you would invest 3,750 in Cebu Air Preferred on September 13, 2024 and sell it today you would earn a total of 25.00 from holding Cebu Air Preferred or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Cebu Air Preferred vs. GT Capital Holdings
Performance |
| Timeline |
| Cebu Air Preferred |
| GT Capital Holdings |
Cebu Air and GT Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and GT Capital
The main advantage of trading using opposite Cebu Air and GT Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, GT Capital 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 GT Capital will offset losses from the drop in GT Capital's long position.| Cebu Air vs. Figaro Coffee Group | Cebu Air vs. National Reinsurance | Cebu Air vs. Allhome Corp | Cebu Air vs. Jollibee Foods Corp |
| GT Capital vs. Manulife Financial Corp | GT Capital vs. Philippine Business Bank | GT Capital vs. House of Investments | GT Capital vs. Cebu Air Preferred |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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