Correlation Between Cebu Air and Apollomics

Can any of the company-specific risk be diversified away by investing in both Cebu Air and Apollomics 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 Apollomics 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 Apollomics Class A, you can compare the effects of market volatilities on Cebu Air and Apollomics 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 Apollomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Apollomics.

Diversification Opportunities for Cebu Air and Apollomics

0.34

Correlation Coefficient

Cebu Air  Apollomics

Weak diversification

The 3 months correlation between Cebu and Apollomics is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Apollomics Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollomics Class A 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 Apollomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollomics Class A has no effect on the direction of Cebu Air i.e., Cebu Air and Apollomics go up and down completely randomly.

Pair Corralation between Cebu Air and Apollomics

Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the Apollomics. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cebu Air ADR is 8.39 times less risky than Apollomics. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Apollomics Class A is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Apollomics Class A on August 30, 2024 and sell it today you would lose (384.00) from holding Apollomics Class A or give up 32.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cebu Air ADR  vs.  Apollomics Class A

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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Apollomics Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollomics Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very uncertain essential indicators, Apollomics may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Cebu Air and Apollomics

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

The idea behind Cebu Air ADR and Apollomics Class A 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.