Correlation Between First Abacus and Cebu Air
Can any of the company-specific risk be diversified away by investing in both First Abacus and Cebu Air 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 First Abacus and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Abacus Financial and Cebu Air Preferred, you can compare the effects of market volatilities on First Abacus and Cebu Air 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 First Abacus with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Abacus and Cebu Air.
Diversification Opportunities for First Abacus and Cebu Air
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Cebu is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding First Abacus Financial and Cebu Air Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air Preferred and First Abacus 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 First Abacus Financial are associated (or correlated) with Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air Preferred has no effect on the direction of First Abacus i.e., First Abacus and Cebu Air go up and down completely randomly.
Pair Corralation between First Abacus and Cebu Air
Assuming the 90 days trading horizon First Abacus Financial is expected to under-perform the Cebu Air. In addition to that, First Abacus is 2.45 times more volatile than Cebu Air Preferred. It trades about -0.29 of its total potential returns per unit of risk. Cebu Air Preferred is currently generating about 0.03 per unit of volatility. If you would invest 3,655 in Cebu Air Preferred on September 16, 2024 and sell it today you would earn a total of 25.00 from holding Cebu Air Preferred or generate 0.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 38.89% |
Values | Daily Returns |
First Abacus Financial vs. Cebu Air Preferred
Performance |
Timeline |
First Abacus Financial |
Cebu Air Preferred |
First Abacus and Cebu Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Abacus and Cebu Air
The main advantage of trading using opposite First Abacus and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Abacus position performs unexpectedly, Cebu Air 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 Cebu Air will offset losses from the drop in Cebu Air's long position.First Abacus vs. Premiere Entertainment | First Abacus vs. Robinsons Retail Holdings | First Abacus vs. Atlas Consolidated Mining | First Abacus vs. Metro Retail Stores |
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Check out your portfolio center.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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