Correlation Between Philippine Savings and LFM Properties
Can any of the company-specific risk be diversified away by investing in both Philippine Savings and LFM Properties 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 LFM Properties 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 LFM Properties Corp, you can compare the effects of market volatilities on Philippine Savings and LFM Properties 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 LFM Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and LFM Properties.
Diversification Opportunities for Philippine Savings and LFM Properties
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Philippine and LFM is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and LFM Properties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LFM Properties Corp 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 LFM Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LFM Properties Corp has no effect on the direction of Philippine Savings i.e., Philippine Savings and LFM Properties go up and down completely randomly.
Pair Corralation between Philippine Savings and LFM Properties
Assuming the 90 days trading horizon Philippine Savings Bank is expected to generate 0.43 times more return on investment than LFM Properties. However, Philippine Savings Bank is 2.32 times less risky than LFM Properties. It trades about -0.06 of its potential returns per unit of risk. LFM Properties Corp is currently generating about -0.93 per unit of risk. If you would invest 5,767 in Philippine Savings Bank on November 27, 2024 and sell it today you would lose (87.00) from holding Philippine Savings Bank or give up 1.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 26.32% |
| Values | Daily Returns |
Philippine Savings Bank vs. LFM Properties Corp
Performance |
| Timeline |
| Philippine Savings Bank |
| LFM Properties Corp |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Philippine Savings and LFM Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Savings and LFM Properties
The main advantage of trading using opposite Philippine Savings and LFM Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Savings position performs unexpectedly, LFM Properties 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 LFM Properties will offset losses from the drop in LFM Properties' long position.| Philippine Savings vs. Converge Information Communications | Philippine Savings vs. Philex Mining Corp | Philippine Savings vs. SM Investments Corp | Philippine Savings vs. Allhome Corp |
| LFM Properties vs. Lepanto Consolidated Mining | LFM Properties vs. Philex Mining Corp | LFM Properties vs. East West Banking | LFM Properties vs. National Reinsurance |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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