Correlation Between Cebu Air and Thunder Power
Can any of the company-specific risk be diversified away by investing in both Cebu Air and Thunder Power 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 Thunder Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cebu Air ADR and Thunder Power Holdings,, you can compare the effects of market volatilities on Cebu Air and Thunder Power 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 Thunder Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Thunder Power.
Diversification Opportunities for Cebu Air and Thunder Power
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cebu and Thunder is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Thunder Power Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Power 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 ADR are associated (or correlated) with Thunder Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Power Holdings, has no effect on the direction of Cebu Air i.e., Cebu Air and Thunder Power go up and down completely randomly.
Pair Corralation between Cebu Air and Thunder Power
Assuming the 90 days horizon Cebu Air ADR is expected to generate 0.31 times more return on investment than Thunder Power. However, Cebu Air ADR is 3.18 times less risky than Thunder Power. It trades about 0.06 of its potential returns per unit of risk. Thunder Power Holdings, is currently generating about -0.14 per unit of risk. If you would invest 150.00 in Cebu Air ADR on September 12, 2024 and sell it today you would earn a total of 35.00 from holding Cebu Air ADR or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Cebu Air ADR vs. Thunder Power Holdings,
Performance |
| Timeline |
| Cebu Air ADR |
| Thunder Power Holdings, |
Cebu Air and Thunder Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Thunder Power
The main advantage of trading using opposite Cebu Air and Thunder Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Thunder Power 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 Thunder Power will offset losses from the drop in Thunder Power's long position.| Cebu Air vs. Finnair Oyj | Cebu Air vs. easyJet plc | Cebu Air vs. Norse Atlantic ASA | Cebu Air vs. Air New Zealand |
| Thunder Power vs. Ford Motor | Thunder Power vs. Ford Motor | Thunder Power vs. F PD | Thunder Power vs. SRIVARU Holding Limited |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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