Correlation Between Semtech and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Semtech 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 Semtech and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and Cebu Air ADR, you can compare the effects of market volatilities on Semtech 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 Semtech with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and Cebu Air.
Diversification Opportunities for Semtech and Cebu Air
Excellent diversification
The 3 months correlation between Semtech and Cebu is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Semtech 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 Semtech 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 Semtech 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 Semtech i.e., Semtech and Cebu Air go up and down completely randomly.
Pair Corralation between Semtech and Cebu Air
Given the investment horizon of 90 days Semtech is expected to generate 0.86 times more return on investment than Cebu Air. However, Semtech is 1.16 times less risky than Cebu Air. It trades about 0.14 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 1,942 in Semtech on September 2, 2024 and sell it today you would earn a total of 4,462 from holding Semtech or generate 229.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Semtech vs. Cebu Air ADR
Performance |
| Timeline |
| Semtech |
| Cebu Air ADR |
Semtech and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semtech and Cebu Air
The main advantage of trading using opposite Semtech and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech 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.| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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