Correlation Between Cebu Air and Marfrig Global
Can any of the company-specific risk be diversified away by investing in both Cebu Air and Marfrig Global 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 Marfrig Global 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 Marfrig Global Foods, you can compare the effects of market volatilities on Cebu Air and Marfrig Global 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 Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Marfrig Global.
Diversification Opportunities for Cebu Air and Marfrig Global
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cebu and Marfrig is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods 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 Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Cebu Air i.e., Cebu Air and Marfrig Global go up and down completely randomly.
Pair Corralation between Cebu Air and Marfrig Global
Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the Marfrig Global. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cebu Air ADR is 1.09 times less risky than Marfrig Global. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Marfrig Global Foods is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 273.00 in Marfrig Global Foods on September 3, 2024 and sell it today you would earn a total of 32.00 from holding Marfrig Global Foods or generate 11.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cebu Air ADR vs. Marfrig Global Foods
Performance |
| Timeline |
| Cebu Air ADR |
| Marfrig Global Foods |
Cebu Air and Marfrig Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Marfrig Global
The main advantage of trading using opposite Cebu Air and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Marfrig Global 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 Marfrig Global will offset losses from the drop in Marfrig Global'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 |
| Marfrig Global vs. BRF SA ADR | Marfrig Global vs. Pilgrims Pride Corp | Marfrig Global vs. John B Sanfilippo | Marfrig Global vs. Seneca Foods Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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