Correlation Between Cebu Air and Norse Atlantic

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

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

Diversification Opportunities for Cebu Air and Norse Atlantic

0.0

Correlation Coefficient

Cebu Air  Norse Atlantic

Pay attention - limited upside

The 3 months correlation between Cebu and Norse is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air and Norse Atlantic ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norse Atlantic ASA and Cebu Air 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 Cebu Air are associated (or correlated) with Norse Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norse Atlantic ASA has no effect on the direction of Cebu Air i.e., Cebu Air and Norse Atlantic go up and down completely randomly.

Pair Corralation between Cebu Air and Norse Atlantic

If you would invest  34.00  in Norse Atlantic ASA on November 29, 2024 and sell it today you would lose (1.00) from holding Norse Atlantic ASA or give up 2.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Cebu Air  vs.  Norse Atlantic ASA

Cebu Air

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cebu Air has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cebu Air is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Norse Atlantic ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Norse Atlantic ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Norse Atlantic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cebu Air and Norse Atlantic

The main advantage of trading using opposite Cebu Air and Norse Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, Norse Atlantic 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 Norse Atlantic will offset losses from the drop in Norse Atlantic's long position.

The idea behind Cebu Air and Norse Atlantic ASA 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 Transaction History module to view history of all your transactions and understand their impact on performance.