Correlation Between Philippine Savings and Pacificonline Systems
Can any of the company-specific risk be diversified away by investing in both Philippine Savings and Pacificonline Systems 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 Pacificonline Systems 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 Pacificonline Systems, you can compare the effects of market volatilities on Philippine Savings and Pacificonline Systems 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 Pacificonline Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and Pacificonline Systems.
Diversification Opportunities for Philippine Savings and Pacificonline Systems
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Philippine and Pacificonline is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and Pacificonline Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacificonline Systems 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 Pacificonline Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacificonline Systems has no effect on the direction of Philippine Savings i.e., Philippine Savings and Pacificonline Systems go up and down completely randomly.
Pair Corralation between Philippine Savings and Pacificonline Systems
Assuming the 90 days trading horizon Philippine Savings is expected to generate 3.65 times less return on investment than Pacificonline Systems. But when comparing it to its historical volatility, Philippine Savings Bank is 2.54 times less risky than Pacificonline Systems. It trades about 0.03 of its potential returns per unit of risk. Pacificonline Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 174.00 in Pacificonline Systems on August 31, 2024 and sell it today you would earn a total of 100.00 from holding Pacificonline Systems or generate 57.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.7% |
| Values | Daily Returns |
Philippine Savings Bank vs. Pacificonline Systems
Performance |
| Timeline |
| Philippine Savings Bank |
| Pacificonline Systems |
Philippine Savings and Pacificonline Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Savings and Pacificonline Systems
The main advantage of trading using opposite Philippine Savings and Pacificonline Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Savings position performs unexpectedly, Pacificonline Systems 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 Pacificonline Systems will offset losses from the drop in Pacificonline Systems' 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 |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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