Correlation Between Cebu Air and Atlas Consolidated

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

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

Diversification Opportunities for Cebu Air and Atlas Consolidated

0.75

Correlation Coefficient

Cebu Air  Atlas Consolidated

Poor diversification

The 3 months correlation between Cebu and Atlas is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air Preferred and Atlas Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Consolidated Mining 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 Preferred are associated (or correlated) with Atlas Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Consolidated Mining has no effect on the direction of Cebu Air i.e., Cebu Air and Atlas Consolidated go up and down completely randomly.

Pair Corralation between Cebu Air and Atlas Consolidated

Assuming the 90 days trading horizon Cebu Air Preferred is expected to generate 1.18 times more return on investment than Atlas Consolidated. However, Cebu Air is 1.18 times more volatile than Atlas Consolidated Mining. It trades about 0.04 of its potential returns per unit of risk. Atlas Consolidated Mining is currently generating about 0.02 per unit of risk. If you would invest  3,575  in Cebu Air Preferred on September 3, 2024 and sell it today you would earn a total of  135.00  from holding Cebu Air Preferred or generate 3.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.06%
Values	Daily Returns

Cebu Air Preferred  vs.  Atlas Consolidated Mining

Cebu Air Preferred

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cebu Air Preferred are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, Cebu Air is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Atlas Consolidated Mining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Consolidated Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Atlas Consolidated is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cebu Air and Atlas Consolidated

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

The idea behind Cebu Air Preferred and Atlas Consolidated Mining 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.