Correlation Between Philippine Business and Metro Retail
Can any of the company-specific risk be diversified away by investing in both Philippine Business and Metro Retail 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 Philippine Business and Metro Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philippine Business Bank and Metro Retail Stores, you can compare the effects of market volatilities on Philippine Business and Metro Retail 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 Philippine Business with a short position of Metro Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Business and Metro Retail.
Diversification Opportunities for Philippine Business and Metro Retail
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Philippine and Metro is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Business Bank and Metro Retail Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Retail Stores and Philippine Business 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 Philippine Business Bank are associated (or correlated) with Metro Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Retail Stores has no effect on the direction of Philippine Business i.e., Philippine Business and Metro Retail go up and down completely randomly.
Pair Corralation between Philippine Business and Metro Retail
Assuming the 90 days trading horizon Philippine Business Bank is expected to generate 1.11 times more return on investment than Metro Retail. However, Philippine Business is 1.11 times more volatile than Metro Retail Stores. It trades about 0.04 of its potential returns per unit of risk. Metro Retail Stores is currently generating about 0.01 per unit of risk. If you would invest 819.00 in Philippine Business Bank on August 29, 2024 and sell it today you would earn a total of 111.00 from holding Philippine Business Bank or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.6% |
| Values | Daily Returns |
Philippine Business Bank vs. Metro Retail Stores
Performance |
| Timeline |
| Philippine Business Bank |
| Metro Retail Stores |
Philippine Business and Metro Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Business and Metro Retail
The main advantage of trading using opposite Philippine Business and Metro Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Business position performs unexpectedly, Metro Retail 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 Metro Retail will offset losses from the drop in Metro Retail's long position.| Philippine Business vs. Apex Mining Co | Philippine Business vs. Pacificonline Systems | Philippine Business vs. SM Investments Corp | Philippine Business vs. Manila Mining Corp |
| Metro Retail vs. Allhome Corp | Metro Retail vs. Jollibee Foods Corp | Metro Retail vs. LFM Properties Corp | Metro Retail vs. PXP Energy Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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