Correlation Between Cebu Air and Corporacion America

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

Diversification Opportunities for Cebu Air and Corporacion America

0.0

Correlation Coefficient

Cebu Air  Corporacion America

Pay attention - limited upside

The 3 months correlation between Cebu and Corporacion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America 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 Corporacion America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion America has no effect on the direction of Cebu Air i.e., Cebu Air and Corporacion America go up and down completely randomly.

Pair Corralation between Cebu Air and Corporacion America

If you would invest  2,005  in Corporacion America Airports on May 7, 2025 and sell it today you would lose (7.00) from holding Corporacion America Airports or give up 0.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Cebu Air ADR  vs.  Corporacion America Airports

Cebu Air ADR

Risk-Adjusted Performance

Weakest

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 fairly strong basic indicators, Cebu Air is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Corporacion America

Risk-Adjusted Performance

Weakest

Over the last 90 days Corporacion America Airports has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Corporacion America 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 Cebu Air and Corporacion America

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

The idea behind Cebu Air ADR and Corporacion America Airports 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.