Correlation Between Araneta Properties and LFM Properties
Can any of the company-specific risk be diversified away by investing in both Araneta Properties and LFM Properties 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 Araneta Properties and LFM Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Araneta Properties and LFM Properties Corp, you can compare the effects of market volatilities on Araneta Properties and LFM Properties 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 Araneta Properties with a short position of LFM Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Araneta Properties and LFM Properties.
Diversification Opportunities for Araneta Properties and LFM Properties
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Araneta and LFM is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Araneta Properties and LFM Properties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LFM Properties Corp and Araneta Properties 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 Araneta Properties are associated (or correlated) with LFM Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LFM Properties Corp has no effect on the direction of Araneta Properties i.e., Araneta Properties and LFM Properties go up and down completely randomly.
Pair Corralation between Araneta Properties and LFM Properties
Assuming the 90 days trading horizon Araneta Properties is expected to generate 0.24 times more return on investment than LFM Properties. However, Araneta Properties is 4.18 times less risky than LFM Properties. It trades about 0.11 of its potential returns per unit of risk. LFM Properties Corp is currently generating about 0.02 per unit of risk. If you would invest 52.00 in Araneta Properties on October 20, 2024 and sell it today you would earn a total of 2.00 from holding Araneta Properties or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 58.82% |
| Values | Daily Returns |
Araneta Properties vs. LFM Properties Corp
Performance |
| Timeline |
| Araneta Properties |
| LFM Properties Corp |
Araneta Properties and LFM Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Araneta Properties and LFM Properties
The main advantage of trading using opposite Araneta Properties and LFM Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Araneta Properties position performs unexpectedly, LFM Properties 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 LFM Properties will offset losses from the drop in LFM Properties' long position.| Araneta Properties vs. Metropolitan Bank Trust | Araneta Properties vs. Crown Asia Chemicals | Araneta Properties vs. National Reinsurance | Araneta Properties vs. Prime Media Holdings |
| LFM Properties vs. COL Financial Group | LFM Properties vs. Century Pacific Food | LFM Properties vs. Asia United Bank | LFM Properties vs. BDO Unibank |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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