Correlation Between Cebu Air and Semtech
Can any of the company-specific risk be diversified away by investing in both Cebu Air and Semtech 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 Semtech 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 Semtech, you can compare the effects of market volatilities on Cebu Air and Semtech 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 Semtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Semtech.
Diversification Opportunities for Cebu Air and Semtech
Excellent diversification
The 3 months correlation between Cebu and Semtech is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech 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 Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of Cebu Air i.e., Cebu Air and Semtech go up and down completely randomly.
Pair Corralation between Cebu Air and Semtech
Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the Semtech. In addition to that, Cebu Air is 1.16 times more volatile than Semtech. It trades about -0.03 of its total potential returns per unit of risk. Semtech is currently generating about 0.14 per unit of volatility. If you would invest 1,942 in Semtech on September 2, 2024 and sell it today you would earn a total of 4,462 from holding Semtech or generate 229.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Cebu Air ADR vs. Semtech
Performance |
| Timeline |
| Cebu Air ADR |
| Semtech |
Cebu Air and Semtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Semtech
The main advantage of trading using opposite Cebu Air and Semtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Semtech 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 Semtech will offset losses from the drop in Semtech's long position.| Cebu Air vs. Fidus Investment Corp | Cebu Air vs. 51Talk Online Education | Cebu Air vs. Nexstar Broadcasting Group | Cebu Air vs. Evolution Gaming Group |
| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
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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