Correlation Between Prime Media and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Prime Media 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 Prime Media and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Media Holdings and Cebu Air, you can compare the effects of market volatilities on Prime Media 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 Prime Media with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Media and Cebu Air.
Diversification Opportunities for Prime Media and Cebu Air
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prime and Cebu is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Prime Media Holdings and Cebu Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air and Prime Media 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 Prime Media 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 has no effect on the direction of Prime Media i.e., Prime Media and Cebu Air go up and down completely randomly.
Pair Corralation between Prime Media and Cebu Air
Assuming the 90 days trading horizon Prime Media Holdings is expected to generate 2.07 times more return on investment than Cebu Air. However, Prime Media is 2.07 times more volatile than Cebu Air. It trades about 0.0 of its potential returns per unit of risk. Cebu Air is currently generating about -0.04 per unit of risk. If you would invest 215.00 in Prime Media Holdings on August 31, 2024 and sell it today you would lose (35.00) from holding Prime Media Holdings or give up 16.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.07% |
| Values | Daily Returns |
Prime Media Holdings vs. Cebu Air
Performance |
| Timeline |
| Prime Media Holdings |
| Cebu Air |
Prime Media and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Media and Cebu Air
The main advantage of trading using opposite Prime Media and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Media 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.| Prime Media vs. GT Capital Holdings | Prime Media vs. Allhome Corp | Prime Media vs. Jollibee Foods Corp | Prime Media vs. LFM Properties Corp |
| Cebu Air vs. Cebu Air Preferred | Cebu Air vs. Allhome Corp | Cebu Air vs. LFM Properties Corp | Cebu Air vs. Altus Property Ventures |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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