Correlation Between Insteel Industries and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Insteel Industries 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 Insteel Industries and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Cebu Air ADR, you can compare the effects of market volatilities on Insteel Industries 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 Insteel Industries with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Cebu Air.
Diversification Opportunities for Insteel Industries and Cebu Air
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Insteel and Cebu is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Cebu Air ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air ADR and Insteel Industries 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 Insteel Industries 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 ADR has no effect on the direction of Insteel Industries i.e., Insteel Industries and Cebu Air go up and down completely randomly.
Pair Corralation between Insteel Industries and Cebu Air
Given the investment horizon of 90 days Insteel Industries is expected to generate 0.47 times more return on investment than Cebu Air. However, Insteel Industries is 2.12 times less risky than Cebu Air. It trades about -0.02 of its potential returns per unit of risk. Cebu Air ADR is currently generating about -0.03 per unit of risk. If you would invest 3,420 in Insteel Industries on September 2, 2024 and sell it today you would lose (472.00) from holding Insteel Industries or give up 13.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Insteel Industries vs. Cebu Air ADR
Performance |
| Timeline |
| Insteel Industries |
| Cebu Air ADR |
Insteel Industries and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Cebu Air
The main advantage of trading using opposite Insteel Industries and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries 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.| Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp | Insteel Industries vs. Northwest Pipe |
| Cebu Air vs. Fidus Investment Corp | Cebu Air vs. 51Talk Online Education | Cebu Air vs. Nexstar Broadcasting Group | Cebu Air vs. Evolution Gaming Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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