Correlation Between Cebu Air and Axelum Resources

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

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

Diversification Opportunities for Cebu Air and Axelum Resources

0.64

Correlation Coefficient

Cebu Air  Axelum Resources

Poor diversification

The 3 months correlation between Cebu and Axelum is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air and Axelum Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axelum Resources Corp 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 are associated (or correlated) with Axelum Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axelum Resources Corp has no effect on the direction of Cebu Air i.e., Cebu Air and Axelum Resources go up and down completely randomly.

Pair Corralation between Cebu Air and Axelum Resources

Assuming the 90 days trading horizon Cebu Air is expected to under-perform the Axelum Resources. But the stock apears to be less risky and, when comparing its historical volatility, Cebu Air is 1.8 times less risky than Axelum Resources. The stock trades about -0.22 of its potential returns per unit of risk. The Axelum Resources Corp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  231.00  in Axelum Resources Corp on September 27, 2024 and sell it today you would lose (27.00) from holding Axelum Resources Corp or give up 11.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.94%
Values	Daily Returns

Cebu Air  vs.  Axelum Resources Corp

Cebu Air

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cebu Air has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Axelum Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axelum Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cebu Air and Axelum Resources

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

The idea behind Cebu Air and Axelum Resources Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.