Correlation Between Figaro Coffee and Philippine Savings
Can any of the company-specific risk be diversified away by investing in both Figaro Coffee 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 Figaro Coffee and Philippine Savings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Figaro Coffee Group and Philippine Savings Bank, you can compare the effects of market volatilities on Figaro Coffee 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 Figaro Coffee with a short position of Philippine Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figaro Coffee and Philippine Savings.
Diversification Opportunities for Figaro Coffee and Philippine Savings
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Figaro and Philippine is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Figaro Coffee Group 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 Figaro Coffee 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 Figaro Coffee Group 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 Figaro Coffee i.e., Figaro Coffee and Philippine Savings go up and down completely randomly.
Pair Corralation between Figaro Coffee and Philippine Savings
Assuming the 90 days trading horizon Figaro Coffee Group is expected to under-perform the Philippine Savings. In addition to that, Figaro Coffee is 1.26 times more volatile than Philippine Savings Bank. It trades about -0.11 of its total potential returns per unit of risk. Philippine Savings Bank is currently generating about 0.04 per unit of volatility. If you would invest 5,920 in Philippine Savings Bank on August 28, 2024 and sell it today you would earn a total of 80.00 from holding Philippine Savings Bank or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Figaro Coffee Group vs. Philippine Savings Bank
Performance |
| Timeline |
| Figaro Coffee Group |
| Philippine Savings Bank |
Figaro Coffee and Philippine Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Figaro Coffee and Philippine Savings
The main advantage of trading using opposite Figaro Coffee and Philippine Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Figaro Coffee 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.| Figaro Coffee vs. Semirara Mining Corp | Figaro Coffee vs. Converge Information Communications | Figaro Coffee vs. Apex Mining Co | Figaro Coffee vs. Metro Retail Stores |
| Philippine Savings vs. Allhome Corp | Philippine Savings vs. Semirara Mining Corp | Philippine Savings vs. SM Investments Corp | Philippine Savings vs. Top Frontier Investment |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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