Correlation Between Cebu Air and OCBCSP

Can any of the company-specific risk be diversified away by investing in both Cebu Air and OCBCSP 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 OCBCSP 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 OCBCSP 1832 10 SEP 30, you can compare the effects of market volatilities on Cebu Air and OCBCSP 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 OCBCSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and OCBCSP.

Diversification Opportunities for Cebu Air and OCBCSP

-0.6

Correlation Coefficient

Cebu Air  OCBCSP

Excellent diversification

The 3 months correlation between Cebu and OCBCSP is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and OCBCSP 1832 10 SEP 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCBCSP 1832 10 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 OCBCSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCBCSP 1832 10 has no effect on the direction of Cebu Air i.e., Cebu Air and OCBCSP go up and down completely randomly.

Pair Corralation between Cebu Air and OCBCSP

Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the OCBCSP. In addition to that, Cebu Air is 3.48 times more volatile than OCBCSP 1832 10 SEP 30. It trades about -0.02 of its total potential returns per unit of risk. OCBCSP 1832 10 SEP 30 is currently generating about 0.0 per unit of volatility. If you would invest  9,098  in OCBCSP 1832 10 SEP 30 on October 4, 2024 and sell it today you would lose (30.00) from holding OCBCSP 1832 10 SEP 30 or give up 0.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	15.49%
Values	Daily Returns

Cebu Air ADR  vs.  OCBCSP 1832 10 SEP 30

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.

OCBCSP 1832 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCBCSP 1832 10 SEP 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Bond's basic indicators remain somewhat 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 OCBCSP 1832 10 SEP 30 investors.

Pair Trading with Cebu Air and OCBCSP

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

The idea behind Cebu Air ADR and OCBCSP 1832 10 SEP 30 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.