Correlation Between Cebu Air and Air China
Can any of the company-specific risk be diversified away by investing in both Cebu Air and Air China 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 Air China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cebu Air and Air China Ltd, you can compare the effects of market volatilities on Cebu Air and Air China 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 Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Air China.
Diversification Opportunities for Cebu Air and Air China
Pay attention - limited upside
The 3 months correlation between Cebu and Air is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air and Air China Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air China 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 are associated (or correlated) with Air China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air China has no effect on the direction of Cebu Air i.e., Cebu Air and Air China go up and down completely randomly.
Pair Corralation between Cebu Air and Air China
If you would invest 1,081 in Air China Ltd on August 29, 2024 and sell it today you would earn a total of 197.00 from holding Air China Ltd or generate 18.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cebu Air vs. Air China Ltd
Performance |
| Timeline |
| Cebu Air |
| Air China |
Cebu Air and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Air China
The main advantage of trading using opposite Cebu Air and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Air China 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 Air China will offset losses from the drop in Air China's long position.| Cebu Air vs. Air France KLM SA | Cebu Air vs. easyJet plc | Cebu Air vs. Norse Atlantic ASA | Cebu Air vs. Air China Limited |
| Air China vs. Singapore Airlines | Air China vs. Singapore Airlines | Air China vs. Qantas Airways Ltd | Air China vs. Copa Holdings SA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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