Correlation Between Cebu Air and Belden

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

Diversification Opportunities for Cebu Air and Belden

-0.09

Correlation Coefficient

Cebu Air  Belden

Good diversification

The 3 months correlation between Cebu and Belden is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Belden Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belden Inc 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 Belden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belden Inc has no effect on the direction of Cebu Air i.e., Cebu Air and Belden go up and down completely randomly.

Pair Corralation between Cebu Air and Belden

Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the Belden. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cebu Air ADR is 1.2 times less risky than Belden. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Belden Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  11,845  in Belden Inc on October 26, 2024 and sell it today you would earn a total of  267.00  from holding Belden Inc or generate 2.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Cebu Air ADR  vs.  Belden Inc

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.

Belden Inc

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Belden Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Belden is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cebu Air and Belden

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

The idea behind Cebu Air ADR and Belden Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..