Correlation Between Cebu Air and Maanshan Iron
Can any of the company-specific risk be diversified away by investing in both Cebu Air and Maanshan Iron 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 Maanshan Iron 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 Maanshan Iron Steel, you can compare the effects of market volatilities on Cebu Air and Maanshan Iron 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 Maanshan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Maanshan Iron.
Diversification Opportunities for Cebu Air and Maanshan Iron
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cebu and Maanshan is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Maanshan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maanshan Iron Steel 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 Maanshan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maanshan Iron Steel has no effect on the direction of Cebu Air i.e., Cebu Air and Maanshan Iron go up and down completely randomly.
Pair Corralation between Cebu Air and Maanshan Iron
Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the Maanshan Iron. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cebu Air ADR is 1.15 times less risky than Maanshan Iron. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Maanshan Iron Steel is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Maanshan Iron Steel on August 26, 2024 and sell it today you would lose (5.00) from holding Maanshan Iron Steel or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cebu Air ADR vs. Maanshan Iron Steel
Performance |
| Timeline |
| Cebu Air ADR |
| Maanshan Iron Steel |
Cebu Air and Maanshan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Maanshan Iron
The main advantage of trading using opposite Cebu Air and Maanshan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Maanshan Iron 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 Maanshan Iron will offset losses from the drop in Maanshan Iron'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 |
| Maanshan Iron vs. Olympic Steel | Maanshan Iron vs. Mesabi Trust | Maanshan Iron vs. Universal Stainless Alloy | Maanshan Iron vs. POSCO Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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