Correlation Between Jollibee Foods and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Jollibee Foods and Cebu Air 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 Jollibee Foods and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jollibee Foods Corp and Cebu Air, you can compare the effects of market volatilities on Jollibee Foods and Cebu Air 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 Jollibee Foods with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jollibee Foods and Cebu Air.
Diversification Opportunities for Jollibee Foods and Cebu Air
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jollibee and Cebu is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Jollibee Foods Corp and Cebu Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air and Jollibee Foods 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 Jollibee Foods Corp are associated (or correlated) with Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air has no effect on the direction of Jollibee Foods i.e., Jollibee Foods and Cebu Air go up and down completely randomly.
Pair Corralation between Jollibee Foods and Cebu Air
Assuming the 90 days trading horizon Jollibee Foods Corp is expected to generate 1.02 times more return on investment than Cebu Air. However, Jollibee Foods is 1.02 times more volatile than Cebu Air. It trades about 0.01 of its potential returns per unit of risk. Cebu Air is currently generating about -0.18 per unit of risk. If you would invest 26,818 in Jollibee Foods Corp on September 26, 2024 and sell it today you would earn a total of 2.00 from holding Jollibee Foods Corp or generate 0.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Jollibee Foods Corp vs. Cebu Air
Performance |
Timeline |
Jollibee Foods Corp |
Cebu Air |
Jollibee Foods and Cebu Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jollibee Foods and Cebu Air
The main advantage of trading using opposite Jollibee Foods and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jollibee Foods position performs unexpectedly, Cebu Air 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 Cebu Air will offset losses from the drop in Cebu Air's long position.Jollibee Foods vs. Philex Mining Corp | Jollibee Foods vs. Alliance Select Foods | Jollibee Foods vs. Apex Mining Co | Jollibee Foods vs. Transpacific Broadband Group |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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