Correlation Between Ayala Corp and Philex Mining
Can any of the company-specific risk be diversified away by investing in both Ayala Corp and Philex Mining 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 Philex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ayala Corp and Philex Mining Corp, you can compare the effects of market volatilities on Ayala Corp and Philex Mining 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 Philex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ayala Corp and Philex Mining.
Diversification Opportunities for Ayala Corp and Philex Mining
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ayala and Philex is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ayala Corp and Philex Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philex Mining Corp 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 Philex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philex Mining Corp has no effect on the direction of Ayala Corp i.e., Ayala Corp and Philex Mining go up and down completely randomly.
Pair Corralation between Ayala Corp and Philex Mining
Assuming the 90 days trading horizon Ayala Corp is expected to generate 0.77 times more return on investment than Philex Mining. However, Ayala Corp is 1.3 times less risky than Philex Mining. It trades about 0.03 of its potential returns per unit of risk. Philex Mining Corp is currently generating about -0.02 per unit of risk. If you would invest 59,011 in Ayala Corp on September 1, 2024 and sell it today you would earn a total of 2,189 from holding Ayala Corp or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ayala Corp vs. Philex Mining Corp
Performance |
| Timeline |
| Ayala Corp |
| Philex Mining Corp |
Ayala Corp and Philex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ayala Corp and Philex Mining
The main advantage of trading using opposite Ayala Corp and Philex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ayala Corp position performs unexpectedly, Philex Mining 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 Philex Mining will offset losses from the drop in Philex Mining's long position.| Ayala Corp vs. Converge Information Communications | Ayala Corp vs. Metro Retail Stores | Ayala Corp vs. Allhome Corp | Ayala Corp vs. SM Investments Corp |
| Philex Mining vs. Figaro Coffee Group | Philex Mining vs. Lepanto Consolidated Mining | Philex Mining vs. Cebu Air Preferred | Philex Mining vs. SM Investments Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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