Correlation Between Top Frontier and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Top Frontier 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 Top Frontier and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Frontier Investment and Cebu Air, you can compare the effects of market volatilities on Top Frontier 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 Top Frontier with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Frontier and Cebu Air.
Diversification Opportunities for Top Frontier and Cebu Air
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Top and Cebu is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment and Cebu Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air and Top Frontier 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 Top Frontier Investment 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 Top Frontier i.e., Top Frontier and Cebu Air go up and down completely randomly.
Pair Corralation between Top Frontier and Cebu Air
Assuming the 90 days trading horizon Top Frontier Investment is expected to generate 1.92 times more return on investment than Cebu Air. However, Top Frontier is 1.92 times more volatile than Cebu Air. It trades about 0.03 of its potential returns per unit of risk. Cebu Air is currently generating about -0.25 per unit of risk. If you would invest 6,770 in Top Frontier Investment on August 28, 2024 and sell it today you would earn a total of 60.00 from holding Top Frontier Investment or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
Top Frontier Investment vs. Cebu Air
Performance |
| Timeline |
| Top Frontier Investment |
| Cebu Air |
Top Frontier and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Frontier and Cebu Air
The main advantage of trading using opposite Top Frontier and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Frontier 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.| Top Frontier vs. Allhome Corp | Top Frontier vs. Altus Property Ventures | Top Frontier vs. AgriNurture | Top Frontier vs. Wilcon Depot |
| Cebu Air vs. Prime Media Holdings | Cebu Air vs. Premiere Entertainment | Cebu Air vs. Figaro Coffee Group | Cebu Air vs. Suntrust Home Developers |
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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