Correlation Between Robinsons Retail and Cebu Air

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

By analyzing existing cross correlation between Robinsons Retail Holdings and Cebu Air Preferred, you can compare the effects of market volatilities on Robinsons Retail 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 Robinsons Retail with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Robinsons Retail and Cebu Air.

Diversification Opportunities for Robinsons Retail and Cebu Air

0.38

Correlation Coefficient

Robinsons Retail  Cebu Air

Weak diversification

The 3 months correlation between Robinsons and Cebu is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Robinsons Retail Holdings and Cebu Air Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air Preferred and Robinsons Retail 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 Robinsons Retail Holdings 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 Preferred has no effect on the direction of Robinsons Retail i.e., Robinsons Retail and Cebu Air go up and down completely randomly.

Pair Corralation between Robinsons Retail and Cebu Air

Assuming the 90 days trading horizon Robinsons Retail Holdings is expected to under-perform the Cebu Air. But the stock apears to be less risky and, when comparing its historical volatility, Robinsons Retail Holdings is 1.53 times less risky than Cebu Air. The stock trades about -0.13 of its potential returns per unit of risk. The Cebu Air Preferred is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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

Robinsons Retail Holdings  vs.  Cebu Air Preferred

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.

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.

Pair Trading with Robinsons Retail and Cebu Air

The main advantage of trading using opposite Robinsons Retail and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Robinsons Retail 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.

The idea behind Robinsons Retail Holdings and Cebu Air Preferred 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.