Correlation Between Philippine Savings and Alliance Select
Can any of the company-specific risk be diversified away by investing in both Philippine Savings 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 Philippine Savings and Alliance Select 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 Alliance Select Foods, you can compare the effects of market volatilities on Philippine Savings 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 Philippine Savings with a short position of Alliance Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and Alliance Select.
Diversification Opportunities for Philippine Savings and Alliance Select
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Philippine and Alliance is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank 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 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 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 Philippine Savings i.e., Philippine Savings and Alliance Select go up and down completely randomly.
Pair Corralation between Philippine Savings and Alliance Select
Assuming the 90 days trading horizon Philippine Savings Bank is expected to generate 0.71 times more return on investment than Alliance Select. However, Philippine Savings Bank is 1.41 times less risky than Alliance Select. It trades about 0.04 of its potential returns per unit of risk. Alliance Select Foods is currently generating about -0.07 per unit of risk. If you would invest 5,925 in Philippine Savings Bank on August 31, 2024 and sell it today you would earn a total of 75.00 from holding Philippine Savings Bank or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 52.38% |
| Values | Daily Returns |
Philippine Savings Bank vs. Alliance Select Foods
Performance |
| Timeline |
| Philippine Savings Bank |
| Alliance Select Foods |
Philippine Savings and Alliance Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Savings and Alliance Select
The main advantage of trading using opposite Philippine Savings and Alliance Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Savings 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.| Philippine Savings vs. Metropolitan Bank Trust | Philippine Savings vs. Philippine National Bank | Philippine Savings vs. Asia United Bank | Philippine Savings vs. East West Banking |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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