Correlation Between Philippine Savings and Cebu Landmasters
Can any of the company-specific risk be diversified away by investing in both Philippine Savings and Cebu Landmasters 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 Savings and Cebu Landmasters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philippine Savings Bank and Cebu Landmasters, you can compare the effects of market volatilities on Philippine Savings and Cebu Landmasters 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 Savings with a short position of Cebu Landmasters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and Cebu Landmasters.
Diversification Opportunities for Philippine Savings and Cebu Landmasters
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Philippine and Cebu is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and Cebu Landmasters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Landmasters and Philippine Savings 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 Savings Bank are associated (or correlated) with Cebu Landmasters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Landmasters has no effect on the direction of Philippine Savings i.e., Philippine Savings and Cebu Landmasters go up and down completely randomly.
Pair Corralation between Philippine Savings and Cebu Landmasters
Assuming the 90 days trading horizon Philippine Savings Bank is expected to generate 1.36 times more return on investment than Cebu Landmasters. However, Philippine Savings is 1.36 times more volatile than Cebu Landmasters. It trades about 0.03 of its potential returns per unit of risk. Cebu Landmasters is currently generating about 0.02 per unit of risk. If you would invest 5,120 in Philippine Savings Bank on September 14, 2024 and sell it today you would earn a total of 930.00 from holding Philippine Savings Bank or generate 18.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.53% |
| Values | Daily Returns |
Philippine Savings Bank vs. Cebu Landmasters
Performance |
| Timeline |
| Philippine Savings Bank |
| Cebu Landmasters |
Philippine Savings and Cebu Landmasters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Savings and Cebu Landmasters
The main advantage of trading using opposite Philippine Savings and Cebu Landmasters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Savings position performs unexpectedly, Cebu Landmasters 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 Cebu Landmasters will offset losses from the drop in Cebu Landmasters' long position.| Philippine Savings vs. Alliance Select Foods | Philippine Savings vs. Philippine Business Bank | Philippine Savings vs. Crown Asia Chemicals | Philippine Savings vs. Figaro Coffee Group |
| Cebu Landmasters vs. SM Investments Corp | Cebu Landmasters vs. Alliance Select Foods | Cebu Landmasters vs. Globe Telecom | Cebu Landmasters vs. House of Investments |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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