Correlation Between Concepcion Industrial and Jollibee Foods
Can any of the company-specific risk be diversified away by investing in both Concepcion Industrial and Jollibee Foods 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 Concepcion Industrial and Jollibee Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Concepcion Industrial Corp and Jollibee Foods Corp, you can compare the effects of market volatilities on Concepcion Industrial and Jollibee Foods 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 Concepcion Industrial with a short position of Jollibee Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concepcion Industrial and Jollibee Foods.
Diversification Opportunities for Concepcion Industrial and Jollibee Foods
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Concepcion and Jollibee is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Concepcion Industrial Corp and Jollibee Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jollibee Foods Corp and Concepcion Industrial 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 Concepcion Industrial Corp are associated (or correlated) with Jollibee Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jollibee Foods Corp has no effect on the direction of Concepcion Industrial i.e., Concepcion Industrial and Jollibee Foods go up and down completely randomly.
Pair Corralation between Concepcion Industrial and Jollibee Foods
Assuming the 90 days trading horizon Concepcion Industrial Corp is expected to under-perform the Jollibee Foods. But the stock apears to be less risky and, when comparing its historical volatility, Concepcion Industrial Corp is 1.13 times less risky than Jollibee Foods. The stock trades about -0.03 of its potential returns per unit of risk. The Jollibee Foods Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 26,718 in Jollibee Foods Corp on August 28, 2024 and sell it today you would earn a total of 442.00 from holding Jollibee Foods Corp or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Concepcion Industrial Corp vs. Jollibee Foods Corp
Performance |
| Timeline |
| Concepcion Industrial |
| Jollibee Foods Corp |
Concepcion Industrial and Jollibee Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Concepcion Industrial and Jollibee Foods
The main advantage of trading using opposite Concepcion Industrial and Jollibee Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Concepcion Industrial position performs unexpectedly, Jollibee Foods 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 Jollibee Foods will offset losses from the drop in Jollibee Foods' long position.The idea behind Concepcion Industrial Corp and Jollibee Foods Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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