Correlation Between Century Pacific and Top Frontier
Can any of the company-specific risk be diversified away by investing in both Century Pacific and Top Frontier 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 Century Pacific and Top Frontier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Pacific Food and Top Frontier Investment, you can compare the effects of market volatilities on Century Pacific and Top Frontier 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 Century Pacific with a short position of Top Frontier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Pacific and Top Frontier.
Diversification Opportunities for Century Pacific and Top Frontier
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Century and Top is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Century Pacific Food and Top Frontier Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Frontier Investment and Century Pacific 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 Century Pacific Food are associated (or correlated) with Top Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Frontier Investment has no effect on the direction of Century Pacific i.e., Century Pacific and Top Frontier go up and down completely randomly.
Pair Corralation between Century Pacific and Top Frontier
Assuming the 90 days trading horizon Century Pacific Food is expected to under-perform the Top Frontier. But the stock apears to be less risky and, when comparing its historical volatility, Century Pacific Food is 2.37 times less risky than Top Frontier. The stock trades about -0.07 of its potential returns per unit of risk. The Top Frontier Investment is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 6,310 in Top Frontier Investment on November 2, 2024 and sell it today you would lose (100.00) from holding Top Frontier Investment or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Century Pacific Food vs. Top Frontier Investment
Performance |
| Timeline |
| Century Pacific Food |
| Top Frontier Investment |
Century Pacific and Top Frontier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Pacific and Top Frontier
The main advantage of trading using opposite Century Pacific and Top Frontier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Pacific position performs unexpectedly, Top Frontier 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 Top Frontier will offset losses from the drop in Top Frontier's long position.| Century Pacific vs. Lepanto Consolidated Mining | Century Pacific vs. Crown Asia Chemicals | Century Pacific vs. Metro Retail Stores | Century Pacific vs. Jollibee Foods Corp |
| Top Frontier vs. Lepanto Consolidated Mining | Top Frontier vs. Philex Mining Corp | Top Frontier vs. STI Education Systems | Top Frontier vs. Prime Media Holdings |
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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