Correlation Between Ayala Land and Philippine Savings
Can any of the company-specific risk be diversified away by investing in both Ayala Land and Philippine Savings 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 Philippine Savings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ayala Land and Philippine Savings Bank, you can compare the effects of market volatilities on Ayala Land and Philippine Savings 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 Philippine Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ayala Land and Philippine Savings.
Diversification Opportunities for Ayala Land and Philippine Savings
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ayala and Philippine is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ayala Land and Philippine Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philippine Savings Bank 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 Philippine Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philippine Savings Bank has no effect on the direction of Ayala Land i.e., Ayala Land and Philippine Savings go up and down completely randomly.
Pair Corralation between Ayala Land and Philippine Savings
Assuming the 90 days trading horizon Ayala Land is expected to under-perform the Philippine Savings. But the stock apears to be less risky and, when comparing its historical volatility, Ayala Land is 1.19 times less risky than Philippine Savings. The stock trades about -0.34 of its potential returns per unit of risk. The Philippine Savings Bank is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 6,020 in Philippine Savings Bank on September 12, 2024 and sell it today you would lose (200.00) from holding Philippine Savings Bank or give up 3.32% 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. Philippine Savings Bank
Performance |
| Timeline |
| Ayala Land |
| Philippine Savings Bank |
Ayala Land and Philippine Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ayala Land and Philippine Savings
The main advantage of trading using opposite Ayala Land and Philippine Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ayala Land position performs unexpectedly, Philippine Savings 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 Philippine Savings will offset losses from the drop in Philippine Savings' long position.| Ayala Land vs. National Reinsurance | Ayala Land vs. BDO Unibank | Ayala Land vs. Philex Mining Corp | Ayala Land vs. Asia United Bank |
| Philippine Savings vs. BDO Unibank | Philippine Savings vs. Metropolitan Bank Trust | Philippine Savings vs. Security Bank Corp | Philippine Savings vs. Union Bank of |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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