Correlation Between Manila Electric and Alliance Select
Can any of the company-specific risk be diversified away by investing in both Manila Electric and Alliance Select 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 Manila Electric and Alliance Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manila Electric Co and Alliance Select Foods, you can compare the effects of market volatilities on Manila Electric and Alliance Select 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 Manila Electric with a short position of Alliance Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manila Electric and Alliance Select.
Diversification Opportunities for Manila Electric and Alliance Select
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manila and Alliance is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Manila Electric Co and Alliance Select Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Select Foods and Manila Electric 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 Manila Electric Co are associated (or correlated) with Alliance Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Select Foods has no effect on the direction of Manila Electric i.e., Manila Electric and Alliance Select go up and down completely randomly.
Pair Corralation between Manila Electric and Alliance Select
Assuming the 90 days trading horizon Manila Electric Co is expected to generate 1.16 times more return on investment than Alliance Select. However, Manila Electric is 1.16 times more volatile than Alliance Select Foods. It trades about 0.01 of its potential returns per unit of risk. Alliance Select Foods is currently generating about -0.15 per unit of risk. If you would invest 49,500 in Manila Electric Co on August 24, 2024 and sell it today you would lose (100.00) from holding Manila Electric Co or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.82% |
| Values | Daily Returns |
Manila Electric Co vs. Alliance Select Foods
Performance |
| Timeline |
| Manila Electric |
| Alliance Select Foods |
Manila Electric and Alliance Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manila Electric and Alliance Select
The main advantage of trading using opposite Manila Electric and Alliance Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manila Electric position performs unexpectedly, Alliance Select 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 Alliance Select will offset losses from the drop in Alliance Select's long position.| Manila Electric vs. Converge Information Communications | Manila Electric vs. Suntrust Home Developers | Manila Electric vs. BDO Unibank | Manila Electric vs. Crown Asia Chemicals |
| Alliance Select vs. Metro Retail Stores | Alliance Select vs. Century Pacific Food | Alliance Select vs. Lepanto Consolidated Mining | Alliance Select vs. Crown Asia Chemicals |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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