Correlation Between Old Republic and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Old Republic 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 Old Republic and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Cebu Air ADR, you can compare the effects of market volatilities on Old Republic 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 Old Republic with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Cebu Air.
Diversification Opportunities for Old Republic and Cebu Air
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Old and Cebu is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International 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 Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and Cebu Air go up and down completely randomly.
Pair Corralation between Old Republic and Cebu Air
Considering the 90-day investment horizon Old Republic International is expected to generate 0.45 times more return on investment than Cebu Air. However, Old Republic International is 2.23 times less risky than Cebu Air. It trades about 0.34 of its potential returns per unit of risk. Cebu Air ADR is currently generating about -0.21 per unit of risk. If you would invest 3,493 in Old Republic International on August 25, 2024 and sell it today you would earn a total of 367.00 from holding Old Republic International or generate 10.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Republic International vs. Cebu Air ADR
Performance |
| Timeline |
| Old Republic Interna |
| Cebu Air ADR |
Old Republic and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Cebu Air
The main advantage of trading using opposite Old Republic and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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.| Old Republic vs. Fiverr International | Old Republic vs. Pinterest | Old Republic vs. Upstart Holdings | Old Republic vs. Fastly Inc |
| Cebu Air vs. Air China Limited | Cebu Air vs. Air France KLM SA | Cebu Air vs. AirAsia Group Berhad | Cebu Air vs. China Southern Airlines |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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