Correlation Between Ayala Land and Manila Electric
Can any of the company-specific risk be diversified away by investing in both Ayala Land 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 Ayala Land and Manila Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ayala Land and Manila Electric Co, you can compare the effects of market volatilities on Ayala Land 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 Ayala Land with a short position of Manila Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ayala Land and Manila Electric.
Diversification Opportunities for Ayala Land and Manila Electric
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ayala and Manila is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ayala Land and Manila Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manila Electric and Ayala Land 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 Land 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 Ayala Land i.e., Ayala Land and Manila Electric go up and down completely randomly.
Pair Corralation between Ayala Land and Manila Electric
Assuming the 90 days trading horizon Ayala Land is expected to under-perform the Manila Electric. But the stock apears to be less risky and, when comparing its historical volatility, Ayala Land is 1.44 times less risky than Manila Electric. The stock trades about -0.28 of its potential returns per unit of risk. The Manila Electric Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 48,520 in Manila Electric Co on September 13, 2024 and sell it today you would lose (520.00) from holding Manila Electric Co or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ayala Land vs. Manila Electric Co
Performance |
| Timeline |
| Ayala Land |
| Manila Electric |
Ayala Land and Manila Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ayala Land and Manila Electric
The main advantage of trading using opposite Ayala Land and Manila Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ayala Land 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.| Ayala Land vs. Robinsons Land Corp | Ayala Land vs. Filinvest Development Coproration | Ayala Land vs. DoubleDragon Properties Corp | Ayala Land vs. DoubleDragon Properties Corp |
| Manila Electric vs. Premiere Entertainment | Manila Electric vs. Lepanto Consolidated Mining | Manila Electric vs. SM Investments Corp | Manila Electric vs. Converge Information Communications |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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