Correlation Between Cebu Air and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Cebu Air and International Consolidated 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 International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cebu Air and International Consolidated Airlines, you can compare the effects of market volatilities on Cebu Air and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and International Consolidated.
Diversification Opportunities for Cebu Air and International Consolidated
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cebu and International is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Cebu Air i.e., Cebu Air and International Consolidated go up and down completely randomly.
Pair Corralation between Cebu Air and International Consolidated
Assuming the 90 days horizon Cebu Air is expected to under-perform the International Consolidated. In addition to that, Cebu Air is 1.45 times more volatile than International Consolidated Airlines. It trades about -0.07 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.06 per unit of volatility. If you would invest 199.00 in International Consolidated Airlines on August 25, 2024 and sell it today you would earn a total of 101.00 from holding International Consolidated Airlines or generate 50.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Cebu Air vs. International Consolidated Air
Performance |
| Timeline |
| Cebu Air |
| International Consolidated |
Cebu Air and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and International Consolidated
The main advantage of trading using opposite Cebu Air and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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