Correlation Between Cebu Air and HF Sinclair

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

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

Diversification Opportunities for Cebu Air and HF Sinclair

0.6

Correlation Coefficient

Cebu Air  HF Sinclair

Poor diversification

The 3 months correlation between Cebu and DINO is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and HF Sinclair Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF Sinclair 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 ADR are associated (or correlated) with HF Sinclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF Sinclair Corp has no effect on the direction of Cebu Air i.e., Cebu Air and HF Sinclair go up and down completely randomly.

Pair Corralation between Cebu Air and HF Sinclair

Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the HF Sinclair. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cebu Air ADR is 1.17 times less risky than HF Sinclair. The pink sheet trades about -0.12 of its potential returns per unit of risk. The HF Sinclair Corp is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  4,466  in HF Sinclair Corp on September 13, 2024 and sell it today you would lose (572.00) from holding HF Sinclair Corp or give up 12.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Cebu Air ADR  vs.  HF Sinclair Corp

Cebu Air ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cebu Air ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HF Sinclair Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cebu Air and HF Sinclair

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

The idea behind Cebu Air ADR and HF Sinclair 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.