Correlation Between Cebu Air and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Cebu Air and Finnair Oyj 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 Finnair Oyj 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 Finnair Oyj, you can compare the effects of market volatilities on Cebu Air and Finnair Oyj 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 Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Finnair Oyj.
Diversification Opportunities for Cebu Air and Finnair Oyj
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cebu and Finnair is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj 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 Finnair Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finnair Oyj has no effect on the direction of Cebu Air i.e., Cebu Air and Finnair Oyj go up and down completely randomly.
Pair Corralation between Cebu Air and Finnair Oyj
Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the Finnair Oyj. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cebu Air ADR is 1.1 times less risky than Finnair Oyj. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Finnair Oyj is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Finnair Oyj on August 28, 2024 and sell it today you would lose (15.00) from holding Finnair Oyj or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cebu Air ADR vs. Finnair Oyj
Performance |
| Timeline |
| Cebu Air ADR |
| Finnair Oyj |
Cebu Air and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Finnair Oyj
The main advantage of trading using opposite Cebu Air and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Finnair Oyj 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 Finnair Oyj will offset losses from the drop in Finnair Oyj's long position.| Cebu Air vs. Sabra Healthcare REIT | Cebu Air vs. SEI Investments | Cebu Air vs. CVW CleanTech | Cebu Air vs. Xponential Fitness |
| Finnair Oyj vs. easyJet plc | Finnair Oyj vs. Norse Atlantic ASA | Finnair Oyj vs. Air New Zealand | Finnair Oyj vs. Air China 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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