Correlation Between Cebu Air and Robinsons Retail

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

Diversification Opportunities for Cebu Air and Robinsons Retail

0.38

Correlation Coefficient

Cebu Air  Robinsons Retail

Weak diversification

The 3 months correlation between Cebu and Robinsons is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air Preferred and Robinsons Retail Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robinsons Retail Holdings 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 Robinsons Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robinsons Retail Holdings has no effect on the direction of Cebu Air i.e., Cebu Air and Robinsons Retail go up and down completely randomly.

Pair Corralation between Cebu Air and Robinsons Retail

Assuming the 90 days trading horizon Cebu Air Preferred is expected to generate 1.53 times more return on investment than Robinsons Retail. However, Cebu Air is 1.53 times more volatile than Robinsons Retail Holdings. It trades about 0.01 of its potential returns per unit of risk. Robinsons Retail Holdings is currently generating about -0.13 per unit of risk. If you would invest  3,690  in Cebu Air Preferred on September 15, 2024 and sell it today you would lose (10.00) from holding Cebu Air Preferred or give up 0.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.5%
Values	Daily Returns

Cebu Air Preferred  vs.  Robinsons Retail Holdings

Cebu Air Preferred

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cebu Air Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Robinsons Retail Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Robinsons Retail Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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 Robinsons Retail

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

The idea behind Cebu Air Preferred and Robinsons Retail Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.