Correlation Between Cebu Air and Premiere Entertainment
Can any of the company-specific risk be diversified away by investing in both Cebu Air and Premiere Entertainment 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 Premiere Entertainment 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 Premiere Entertainment, you can compare the effects of market volatilities on Cebu Air and Premiere Entertainment 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 Premiere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Premiere Entertainment.
Diversification Opportunities for Cebu Air and Premiere Entertainment
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cebu and Premiere is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air Preferred and Premiere Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premiere Entertainment 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 Premiere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premiere Entertainment has no effect on the direction of Cebu Air i.e., Cebu Air and Premiere Entertainment go up and down completely randomly.
Pair Corralation between Cebu Air and Premiere Entertainment
Assuming the 90 days trading horizon Cebu Air Preferred is expected to generate 0.93 times more return on investment than Premiere Entertainment. However, Cebu Air Preferred is 1.08 times less risky than Premiere Entertainment. It trades about -0.08 of its potential returns per unit of risk. Premiere Entertainment is currently generating about -0.08 per unit of risk. If you would invest 3,850 in Cebu Air Preferred on September 1, 2024 and sell it today you would lose (140.00) from holding Cebu Air Preferred or give up 3.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Cebu Air Preferred vs. Premiere Entertainment
Performance |
| Timeline |
| Cebu Air Preferred |
| Premiere Entertainment |
Cebu Air and Premiere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Premiere Entertainment
The main advantage of trading using opposite Cebu Air and Premiere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Premiere Entertainment 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 Premiere Entertainment will offset losses from the drop in Premiere Entertainment's long position.| Cebu Air vs. Allhome Corp | Cebu Air vs. LFM Properties Corp | Cebu Air vs. Altus Property Ventures | Cebu Air vs. Monde Nissin Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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