Correlation Between Jollibee Foods and Philippine Business
Can any of the company-specific risk be diversified away by investing in both Jollibee Foods and Philippine Business 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 Philippine Business 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 Philippine Business Bank, you can compare the effects of market volatilities on Jollibee Foods and Philippine Business 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 Philippine Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jollibee Foods and Philippine Business.
Diversification Opportunities for Jollibee Foods and Philippine Business
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Jollibee and Philippine is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Jollibee Foods Corp and Philippine Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philippine Business Bank 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 Philippine Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philippine Business Bank has no effect on the direction of Jollibee Foods i.e., Jollibee Foods and Philippine Business go up and down completely randomly.
Pair Corralation between Jollibee Foods and Philippine Business
Assuming the 90 days trading horizon Jollibee Foods Corp is expected to under-perform the Philippine Business. In addition to that, Jollibee Foods is 2.12 times more volatile than Philippine Business Bank. It trades about -0.05 of its total potential returns per unit of risk. Philippine Business Bank is currently generating about 0.06 per unit of volatility. If you would invest 920.00 in Philippine Business Bank on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Philippine Business Bank or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jollibee Foods Corp vs. Philippine Business Bank
Performance |
| Timeline |
| Jollibee Foods Corp |
| Philippine Business Bank |
Jollibee Foods and Philippine Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jollibee Foods and Philippine Business
The main advantage of trading using opposite Jollibee Foods and Philippine Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jollibee Foods position performs unexpectedly, Philippine Business 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 Business will offset losses from the drop in Philippine Business' long position.| Jollibee Foods vs. Top Frontier Investment | Jollibee Foods vs. Alliance Select Foods | Jollibee Foods vs. Converge Information Communications | Jollibee Foods vs. BDO Unibank |
| Philippine Business vs. Metropolitan Bank Trust | Philippine Business vs. Philippine National Bank | Philippine Business vs. Asia United Bank | Philippine Business vs. Philippine Savings Bank |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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