Correlation Between Cebu Air and SM Investments
Can any of the company-specific risk be diversified away by investing in both Cebu Air and SM Investments 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 SM Investments 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 SM Investments Corp, you can compare the effects of market volatilities on Cebu Air and SM Investments 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 SM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and SM Investments.
Diversification Opportunities for Cebu Air and SM Investments
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cebu and SM Investments is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air Preferred and SM Investments Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments 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 Preferred are associated (or correlated) with SM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Investments Corp has no effect on the direction of Cebu Air i.e., Cebu Air and SM Investments go up and down completely randomly.
Pair Corralation between Cebu Air and SM Investments
Assuming the 90 days trading horizon Cebu Air Preferred is expected to generate 0.99 times more return on investment than SM Investments. However, Cebu Air Preferred is 1.01 times less risky than SM Investments. It trades about 0.06 of its potential returns per unit of risk. SM Investments Corp is currently generating about 0.03 per unit of risk. If you would invest 3,145 in Cebu Air Preferred on September 14, 2024 and sell it today you would earn a total of 605.00 from holding Cebu Air Preferred or generate 19.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 88.93% |
Values | Daily Returns |
Cebu Air Preferred vs. SM Investments Corp
Performance |
Timeline |
Cebu Air Preferred |
SM Investments Corp |
Cebu Air and SM Investments Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cebu Air and SM Investments
The main advantage of trading using opposite Cebu Air and SM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air position performs unexpectedly, SM Investments 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 SM Investments will offset losses from the drop in SM Investments' long position.Cebu Air vs. GT Capital Holdings | Cebu Air vs. Allhome Corp | Cebu Air vs. Jollibee Foods Corp | Cebu Air vs. LFM Properties Corp |
SM Investments vs. Apex Mining Co | SM Investments vs. Metro Retail Stores | SM Investments vs. Cebu Air Preferred | SM Investments vs. Concepcion Industrial Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Content Syndication Quickly integrate customizable finance content to your own investment portal |