Correlation Between Aboitiz Equity and Manila Electric
Can any of the company-specific risk be diversified away by investing in both Aboitiz Equity and Manila Electric 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 Aboitiz Equity and Manila Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aboitiz Equity Ventures and Manila Electric Co, you can compare the effects of market volatilities on Aboitiz Equity and Manila Electric 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 Aboitiz Equity with a short position of Manila Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aboitiz Equity and Manila Electric.
Diversification Opportunities for Aboitiz Equity and Manila Electric
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aboitiz and Manila is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Aboitiz Equity Ventures and Manila Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manila Electric and Aboitiz Equity 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 Aboitiz Equity Ventures are associated (or correlated) with Manila Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manila Electric has no effect on the direction of Aboitiz Equity i.e., Aboitiz Equity and Manila Electric go up and down completely randomly.
Pair Corralation between Aboitiz Equity and Manila Electric
Assuming the 90 days trading horizon Aboitiz Equity Ventures is expected to under-perform the Manila Electric. But the stock apears to be less risky and, when comparing its historical volatility, Aboitiz Equity Ventures is 1.09 times less risky than Manila Electric. The stock trades about -0.02 of its potential returns per unit of risk. The Manila Electric Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 36,006 in Manila Electric Co on August 27, 2024 and sell it today you would earn a total of 12,594 from holding Manila Electric Co or generate 34.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aboitiz Equity Ventures vs. Manila Electric Co
Performance |
| Timeline |
| Aboitiz Equity Ventures |
| Manila Electric |
Aboitiz Equity and Manila Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aboitiz Equity and Manila Electric
The main advantage of trading using opposite Aboitiz Equity and Manila Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aboitiz Equity position performs unexpectedly, Manila Electric 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 Manila Electric will offset losses from the drop in Manila Electric's long position.| Aboitiz Equity vs. COL Financial Group | Aboitiz Equity vs. Century Pacific Food | Aboitiz Equity vs. Semirara Mining Corp | Aboitiz Equity vs. Security Bank Corp |
| Manila Electric vs. Aboitiz Equity Ventures | Manila Electric vs. Allhome Corp | Manila Electric vs. LFM Properties Corp | Manila Electric vs. Altus Property Ventures |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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