Correlation Between Alliance Select and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Alliance Select 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 Alliance Select and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Select Foods and Cebu Air, you can compare the effects of market volatilities on Alliance Select 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 Alliance Select with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Select and Cebu Air.
Diversification Opportunities for Alliance Select and Cebu Air
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alliance and Cebu is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Select Foods and Cebu Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air and Alliance Select 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 Alliance Select Foods 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 has no effect on the direction of Alliance Select i.e., Alliance Select and Cebu Air go up and down completely randomly.
Pair Corralation between Alliance Select and Cebu Air
Assuming the 90 days trading horizon Alliance Select Foods is expected to generate 0.99 times more return on investment than Cebu Air. However, Alliance Select Foods is 1.01 times less risky than Cebu Air. It trades about -0.14 of its potential returns per unit of risk. Cebu Air is currently generating about -0.25 per unit of risk. If you would invest 39.00 in Alliance Select Foods on August 28, 2024 and sell it today you would lose (1.00) from holding Alliance Select Foods or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 45.0% |
| Values | Daily Returns |
Alliance Select Foods vs. Cebu Air
Performance |
| Timeline |
| Alliance Select Foods |
| Cebu Air |
Alliance Select and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Select and Cebu Air
The main advantage of trading using opposite Alliance Select and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Select 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.| Alliance Select vs. Atlas Consolidated Mining | Alliance Select vs. Semirara Mining Corp | Alliance Select vs. Apex Mining Co | Alliance Select vs. Lepanto Consolidated Mining |
| Cebu Air vs. Prime Media Holdings | Cebu Air vs. Premiere Entertainment | Cebu Air vs. Figaro Coffee Group | Cebu Air vs. Suntrust Home Developers |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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