Correlation Between LFM Properties and Cebu Air
Can any of the company-specific risk be diversified away by investing in both LFM Properties 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 LFM Properties and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LFM Properties Corp and Cebu Air Preferred, you can compare the effects of market volatilities on LFM Properties 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 LFM Properties with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of LFM Properties and Cebu Air.
Diversification Opportunities for LFM Properties and Cebu Air
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between LFM and Cebu is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding LFM Properties Corp 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 LFM Properties 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 LFM Properties Corp 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 LFM Properties i.e., LFM Properties and Cebu Air go up and down completely randomly.
Pair Corralation between LFM Properties and Cebu Air
Assuming the 90 days trading horizon LFM Properties Corp is expected to generate 3.4 times more return on investment than Cebu Air. However, LFM Properties is 3.4 times more volatile than Cebu Air Preferred. It trades about 0.01 of its potential returns per unit of risk. Cebu Air Preferred is currently generating about -0.17 per unit of risk. If you would invest 5.70 in LFM Properties Corp on August 29, 2024 and sell it today you would lose (0.10) from holding LFM Properties Corp or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.67% |
| Values | Daily Returns |
LFM Properties Corp vs. Cebu Air Preferred
Performance |
| Timeline |
| LFM Properties Corp |
| Cebu Air Preferred |
LFM Properties and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LFM Properties and Cebu Air
The main advantage of trading using opposite LFM Properties and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LFM Properties 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.| LFM Properties vs. Philippine Savings Bank | LFM Properties vs. Metro Retail Stores | LFM Properties vs. Atlas Consolidated Mining | LFM Properties vs. Transpacific Broadband Group |
| Cebu Air vs. Cebu Air | Cebu Air vs. Allhome Corp | Cebu Air vs. Jollibee Foods Corp | Cebu Air vs. LFM Properties 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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