Correlation Between Dito CME and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Dito CME and Cebu Air 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 Dito CME and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dito CME Holdings and Cebu Air Preferred, you can compare the effects of market volatilities on Dito CME and Cebu Air 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 Dito CME with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dito CME and Cebu Air.
Diversification Opportunities for Dito CME and Cebu Air
Good diversification
The 3 months correlation between Dito and Cebu is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dito CME Holdings and Cebu Air Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air Preferred and Dito CME 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 Dito CME Holdings are associated (or correlated) with Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air Preferred has no effect on the direction of Dito CME i.e., Dito CME and Cebu Air go up and down completely randomly.
Pair Corralation between Dito CME and Cebu Air
Assuming the 90 days trading horizon Dito CME Holdings is expected to under-perform the Cebu Air. In addition to that, Dito CME is 1.86 times more volatile than Cebu Air Preferred. It trades about -0.09 of its total potential returns per unit of risk. Cebu Air Preferred is currently generating about 0.07 per unit of volatility. If you would invest 3,310 in Cebu Air Preferred on September 3, 2024 and sell it today you would earn a total of 400.00 from holding Cebu Air Preferred or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.87% |
| Values | Daily Returns |
Dito CME Holdings vs. Cebu Air Preferred
Performance |
| Timeline |
| Dito CME Holdings |
| Cebu Air Preferred |
Dito CME and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dito CME and Cebu Air
The main advantage of trading using opposite Dito CME and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dito CME position performs unexpectedly, Cebu Air 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 Cebu Air will offset losses from the drop in Cebu Air's long position.| Dito CME vs. Cebu Air Preferred | Dito CME vs. Premiere Entertainment | Dito CME vs. Manila Mining Corp | Dito CME vs. Metro Retail Stores |
| Cebu Air vs. Converge Information Communications | Cebu Air vs. Lepanto Consolidated Mining | Cebu Air vs. Century Pacific Food | Cebu Air vs. Apex Mining Co |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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