Correlation Between Jollibee Foods and Oriental Petroleum
Can any of the company-specific risk be diversified away by investing in both Jollibee Foods and Oriental Petroleum 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 Jollibee Foods and Oriental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jollibee Foods Corp and Oriental Petroleum and, you can compare the effects of market volatilities on Jollibee Foods and Oriental Petroleum 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 Jollibee Foods with a short position of Oriental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jollibee Foods and Oriental Petroleum.
Diversification Opportunities for Jollibee Foods and Oriental Petroleum
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jollibee and Oriental is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Jollibee Foods Corp and Oriental Petroleum and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Petroleum and and Jollibee Foods 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 Jollibee Foods Corp are associated (or correlated) with Oriental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Petroleum and has no effect on the direction of Jollibee Foods i.e., Jollibee Foods and Oriental Petroleum go up and down completely randomly.
Pair Corralation between Jollibee Foods and Oriental Petroleum
Assuming the 90 days trading horizon Jollibee Foods is expected to generate 1.4 times less return on investment than Oriental Petroleum. But when comparing it to its historical volatility, Jollibee Foods Corp is 2.75 times less risky than Oriental Petroleum. It trades about 0.06 of its potential returns per unit of risk. Oriental Petroleum and is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 0.70 in Oriental Petroleum and on September 12, 2024 and sell it today you would earn a total of 0.01 from holding Oriental Petroleum and or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 47.62% |
| Values | Daily Returns |
Jollibee Foods Corp vs. Oriental Petroleum and
Performance |
| Timeline |
| Jollibee Foods Corp |
| Oriental Petroleum and |
Jollibee Foods and Oriental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jollibee Foods and Oriental Petroleum
The main advantage of trading using opposite Jollibee Foods and Oriental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jollibee Foods position performs unexpectedly, Oriental Petroleum 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 Oriental Petroleum will offset losses from the drop in Oriental Petroleum's long position.| Jollibee Foods vs. Century Pacific Food | Jollibee Foods vs. Lepanto Consolidated Mining | Jollibee Foods vs. Cebu Air Preferred | Jollibee Foods vs. Converge Information Communications |
| Oriental Petroleum vs. Rizal Commercial Banking | Oriental Petroleum vs. National Reinsurance | Oriental Petroleum vs. Transpacific Broadband Group | Oriental Petroleum vs. Atlas Consolidated Mining |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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