Correlation Between Cebu Air and Enersys
Can any of the company-specific risk be diversified away by investing in both Cebu Air and Enersys 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 Enersys 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 Enersys, you can compare the effects of market volatilities on Cebu Air and Enersys 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 Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Enersys.
Diversification Opportunities for Cebu Air and Enersys
Poor diversification
The 3 months correlation between Cebu and Enersys is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Cebu Air i.e., Cebu Air and Enersys go up and down completely randomly.
Pair Corralation between Cebu Air and Enersys
Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the Enersys. In addition to that, Cebu Air is 2.26 times more volatile than Enersys. It trades about -0.03 of its total potential returns per unit of risk. Enersys is currently generating about 0.0 per unit of volatility. If you would invest 9,882 in Enersys on September 12, 2024 and sell it today you would lose (339.00) from holding Enersys or give up 3.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cebu Air ADR vs. Enersys
Performance |
| Timeline |
| Cebu Air ADR |
| Enersys |
Cebu Air and Enersys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Enersys
The main advantage of trading using opposite Cebu Air and Enersys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Enersys 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 Enersys will offset losses from the drop in Enersys' long position.| Cebu Air vs. Finnair Oyj | Cebu Air vs. easyJet plc | Cebu Air vs. Norse Atlantic ASA | Cebu Air vs. Air New Zealand |
| Enersys vs. Advanced Energy Industries | Enersys vs. Hubbell | Enersys vs. Acuity Brands | Enersys vs. Kimball Electronics |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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