Correlation Between Cebu Air and Kulicke
Can any of the company-specific risk be diversified away by investing in both Cebu Air and Kulicke 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 Kulicke 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 Kulicke and Soffa, you can compare the effects of market volatilities on Cebu Air and Kulicke 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 Kulicke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Kulicke.
Diversification Opportunities for Cebu Air and Kulicke
Pay attention - limited upside
The 3 months correlation between Cebu and Kulicke is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Kulicke and Soffa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kulicke and Soffa 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 Kulicke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kulicke and Soffa has no effect on the direction of Cebu Air i.e., Cebu Air and Kulicke go up and down completely randomly.
Pair Corralation between Cebu Air and Kulicke
Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the Kulicke. In addition to that, Cebu Air is 1.44 times more volatile than Kulicke and Soffa. It trades about -0.02 of its total potential returns per unit of risk. Kulicke and Soffa is currently generating about 0.02 per unit of volatility. If you would invest 4,336 in Kulicke and Soffa on September 12, 2024 and sell it today you would earn a total of 548.00 from holding Kulicke and Soffa or generate 12.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cebu Air ADR vs. Kulicke and Soffa
Performance |
| Timeline |
| Cebu Air ADR |
| Kulicke and Soffa |
Cebu Air and Kulicke Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Kulicke
The main advantage of trading using opposite Cebu Air and Kulicke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Kulicke 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 Kulicke will offset losses from the drop in Kulicke'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 |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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