Correlation Between Philippine Savings and Century Pacific
Can any of the company-specific risk be diversified away by investing in both Philippine Savings and Century Pacific 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 Century Pacific 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 Century Pacific Food, you can compare the effects of market volatilities on Philippine Savings and Century Pacific 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 Century Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and Century Pacific.
Diversification Opportunities for Philippine Savings and Century Pacific
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Philippine and Century is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and Century Pacific Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Pacific Food 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 Century Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Pacific Food has no effect on the direction of Philippine Savings i.e., Philippine Savings and Century Pacific go up and down completely randomly.
Pair Corralation between Philippine Savings and Century Pacific
Assuming the 90 days trading horizon Philippine Savings is expected to generate 2.86 times less return on investment than Century Pacific. But when comparing it to its historical volatility, Philippine Savings Bank is 1.07 times less risky than Century Pacific. It trades about 0.03 of its potential returns per unit of risk. Century Pacific Food is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,340 in Century Pacific Food on August 31, 2024 and sell it today you would earn a total of 1,860 from holding Century Pacific Food or generate 79.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.66% |
| Values | Daily Returns |
Philippine Savings Bank vs. Century Pacific Food
Performance |
| Timeline |
| Philippine Savings Bank |
| Century Pacific Food |
Philippine Savings and Century Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Savings and Century Pacific
The main advantage of trading using opposite Philippine Savings and Century Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Savings position performs unexpectedly, Century Pacific 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 Century Pacific will offset losses from the drop in Century Pacific's long position.| Philippine Savings vs. Metropolitan Bank Trust | Philippine Savings vs. Philippine National Bank | Philippine Savings vs. Asia United Bank | Philippine Savings vs. East West Banking |
| Century Pacific vs. Alliance Select Foods | Century Pacific vs. East West Banking | Century Pacific vs. Manulife Financial Corp | Century Pacific vs. Robinsons Retail Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |