Correlation Between Cebu Air and Artisan Partners

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

By analyzing existing cross correlation between Cebu Air ADR and Artisan Partners Asset, you can compare the effects of market volatilities on Cebu Air and Artisan Partners 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 Artisan Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Artisan Partners.

Diversification Opportunities for Cebu Air and Artisan Partners

-0.82

Correlation Coefficient

Cebu Air  Artisan Partners

Pay attention - limited upside

The 3 months correlation between Cebu and Artisan is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset 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 ADR are associated (or correlated) with Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of Cebu Air i.e., Cebu Air and Artisan Partners go up and down completely randomly.

Pair Corralation between Cebu Air and Artisan Partners

Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the Artisan Partners. In addition to that, Cebu Air is 1.78 times more volatile than Artisan Partners Asset. It trades about -0.02 of its total potential returns per unit of risk. Artisan Partners Asset is currently generating about 0.06 per unit of volatility. If you would invest  2,654  in Artisan Partners Asset on September 22, 2024 and sell it today you would earn a total of  1,720  from holding Artisan Partners Asset or generate 64.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Cebu Air ADR  vs.  Artisan Partners Asset

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 inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Artisan Partners Asset

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Partners Asset are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Artisan Partners is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cebu Air and Artisan Partners

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

The idea behind Cebu Air ADR and Artisan Partners Asset 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.