Correlation Between International Consolidated and Cebu Air

Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between International Consolidated Airlines and Cebu Air ADR, you can compare the effects of market volatilities on International Consolidated 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 International Consolidated with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Cebu Air.

Diversification Opportunities for International Consolidated and Cebu Air

-0.69

Correlation Coefficient

International Consolidated  Cebu Air

Excellent diversification

The 3 months correlation between International and Cebu is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air 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 International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and Cebu Air go up and down completely randomly.

Pair Corralation between International Consolidated and Cebu Air

If you would invest  250.00  in International Consolidated Airlines on October 7, 2024 and sell it today you would earn a total of  112.00  from holding International Consolidated Airlines or generate 44.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.35%
Values	Daily Returns

International Consolidated Air  vs.  Cebu Air ADR

International Consolidated

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, International Consolidated reported solid returns over the last few months and may actually be approaching a breakup point.

Cebu Air ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cebu Air ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with International Consolidated and Cebu Air

The main advantage of trading using opposite International Consolidated and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.

The idea behind International Consolidated Airlines and Cebu Air ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.