Correlation Between Philippine Savings and Lepanto Consolidated
Can any of the company-specific risk be diversified away by investing in both Philippine Savings and Lepanto Consolidated 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 Lepanto Consolidated 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 Lepanto Consolidated Mining, you can compare the effects of market volatilities on Philippine Savings and Lepanto Consolidated 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 Lepanto Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and Lepanto Consolidated.
Diversification Opportunities for Philippine Savings and Lepanto Consolidated
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Philippine and Lepanto is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and Lepanto Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepanto Consolidated 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 Lepanto Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lepanto Consolidated has no effect on the direction of Philippine Savings i.e., Philippine Savings and Lepanto Consolidated go up and down completely randomly.
Pair Corralation between Philippine Savings and Lepanto Consolidated
Assuming the 90 days trading horizon Philippine Savings Bank is expected to generate 0.64 times more return on investment than Lepanto Consolidated. However, Philippine Savings Bank is 1.56 times less risky than Lepanto Consolidated. It trades about 0.03 of its potential returns per unit of risk. Lepanto Consolidated Mining is currently generating about -0.02 per unit of risk. If you would invest 5,124 in Philippine Savings Bank on August 31, 2024 and sell it today you would earn a total of 876.00 from holding Philippine Savings Bank or generate 17.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.14% |
| Values | Daily Returns |
Philippine Savings Bank vs. Lepanto Consolidated Mining
Performance |
| Timeline |
| Philippine Savings Bank |
| Lepanto Consolidated |
Philippine Savings and Lepanto Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Savings and Lepanto Consolidated
The main advantage of trading using opposite Philippine Savings and Lepanto Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Savings position performs unexpectedly, Lepanto Consolidated 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 Lepanto Consolidated will offset losses from the drop in Lepanto Consolidated'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 |
| Lepanto Consolidated vs. Manila Mining Corp | Lepanto Consolidated vs. Cebu Air Preferred | Lepanto Consolidated vs. Top Frontier Investment | Lepanto Consolidated vs. Allhome 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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