Correlation Between Ayala Corp and Asia United
Can any of the company-specific risk be diversified away by investing in both Ayala Corp and Asia United 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 Ayala Corp and Asia United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ayala Corp and Asia United Bank, you can compare the effects of market volatilities on Ayala Corp and Asia United 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 Ayala Corp with a short position of Asia United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ayala Corp and Asia United.
Diversification Opportunities for Ayala Corp and Asia United
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ayala and Asia is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ayala Corp and Asia United Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia United Bank and Ayala Corp 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 Ayala Corp are associated (or correlated) with Asia United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia United Bank has no effect on the direction of Ayala Corp i.e., Ayala Corp and Asia United go up and down completely randomly.
Pair Corralation between Ayala Corp and Asia United
Assuming the 90 days trading horizon Ayala Corp is expected to under-perform the Asia United. In addition to that, Ayala Corp is 1.2 times more volatile than Asia United Bank. It trades about -0.18 of its total potential returns per unit of risk. Asia United Bank is currently generating about 0.64 per unit of volatility. If you would invest 6,180 in Asia United Bank on October 25, 2024 and sell it today you would earn a total of 1,145 from holding Asia United Bank or generate 18.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ayala Corp vs. Asia United Bank
Performance |
| Timeline |
| Ayala Corp |
| Asia United Bank |
Ayala Corp and Asia United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ayala Corp and Asia United
The main advantage of trading using opposite Ayala Corp and Asia United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ayala Corp position performs unexpectedly, Asia United 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 Asia United will offset losses from the drop in Asia United's long position.| Ayala Corp vs. Atlas Consolidated Mining | Ayala Corp vs. Manila Mining Corp | Ayala Corp vs. Philex Mining Corp | Ayala Corp vs. House of Investments |
| Asia United vs. Jollibee Foods Corp | Asia United vs. Philippine Savings Bank | Asia United vs. BDO Unibank | Asia United vs. Cebu Air Preferred |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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