Correlation Between Norse Atlantic and Cebu Air

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

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

Diversification Opportunities for Norse Atlantic and Cebu Air

0.76

Correlation Coefficient

Norse Atlantic  Cebu Air

Poor diversification

The 3 months correlation between Norse and Cebu is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Norse Atlantic ASA and Cebu Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air and Norse Atlantic 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 Norse Atlantic ASA 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 Norse Atlantic i.e., Norse Atlantic and Cebu Air go up and down completely randomly.

Pair Corralation between Norse Atlantic and Cebu Air

Assuming the 90 days horizon Norse Atlantic is expected to generate 14.76 times less return on investment than Cebu Air. But when comparing it to its historical volatility, Norse Atlantic ASA is 24.01 times less risky than Cebu Air. It trades about 0.21 of its potential returns per unit of risk. Cebu Air is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.20  in Cebu Air on May 7, 2025 and sell it today you would earn a total of  144.80  from holding Cebu Air or generate 12066.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.06%
Values	Daily Returns

Norse Atlantic ASA  vs.  Cebu Air

Norse Atlantic ASA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Norse Atlantic ASA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Norse Atlantic reported solid returns over the last few months and may actually be approaching a breakup point.

Cebu Air

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cebu Air are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cebu Air reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Norse Atlantic and Cebu Air

The main advantage of trading using opposite Norse Atlantic and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norse Atlantic 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 Norse Atlantic ASA and Cebu Air 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.