Correlation Between Cebu Air and APPLE

Can any of the company-specific risk be diversified away by investing in both Cebu Air and APPLE 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 APPLE 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 APPLE INC 3, you can compare the effects of market volatilities on Cebu Air and APPLE 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 APPLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and APPLE.

Diversification Opportunities for Cebu Air and APPLE

0.55

Correlation Coefficient

Cebu Air  APPLE

Very weak diversification

The 3 months correlation between Cebu and APPLE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and APPLE INC 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLE INC 3 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 APPLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLE INC 3 has no effect on the direction of Cebu Air i.e., Cebu Air and APPLE go up and down completely randomly.

Pair Corralation between Cebu Air and APPLE

Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the APPLE. In addition to that, Cebu Air is 3.4 times more volatile than APPLE INC 3. It trades about -0.12 of its total potential returns per unit of risk. APPLE INC 3 is currently generating about -0.04 per unit of volatility. If you would invest  9,801  in APPLE INC 3 on September 12, 2024 and sell it today you would lose (132.00) from holding APPLE INC 3 or give up 1.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Cebu Air ADR  vs.  APPLE INC 3

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.

APPLE INC 3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APPLE INC 3 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APPLE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cebu Air and APPLE

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

The idea behind Cebu Air ADR and APPLE INC 3 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.