Correlation Between Philippine Savings and Philex Mining
Can any of the company-specific risk be diversified away by investing in both Philippine Savings and Philex Mining 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 Philex Mining 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 Philex Mining Corp, you can compare the effects of market volatilities on Philippine Savings and Philex Mining 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 Philex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and Philex Mining.
Diversification Opportunities for Philippine Savings and Philex Mining
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Philippine and Philex is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and Philex Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philex Mining 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 Philex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philex Mining Corp has no effect on the direction of Philippine Savings i.e., Philippine Savings and Philex Mining go up and down completely randomly.
Pair Corralation between Philippine Savings and Philex Mining
Assuming the 90 days trading horizon Philippine Savings Bank is expected to generate 0.89 times more return on investment than Philex Mining. However, Philippine Savings Bank is 1.13 times less risky than Philex Mining. It trades about 0.04 of its potential returns per unit of risk. Philex Mining Corp is currently generating about -0.42 per unit of risk. If you would invest 5,920 in Philippine Savings Bank on August 29, 2024 and sell it today you would earn a total of 80.00 from holding Philippine Savings Bank or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Philippine Savings Bank vs. Philex Mining Corp
Performance |
| Timeline |
| Philippine Savings Bank |
| Philex Mining Corp |
Philippine Savings and Philex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Savings and Philex Mining
The main advantage of trading using opposite Philippine Savings and Philex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Savings position performs unexpectedly, Philex Mining 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 Philex Mining will offset losses from the drop in Philex Mining's long position.| Philippine Savings vs. Allhome Corp | Philippine Savings vs. Semirara Mining Corp | Philippine Savings vs. SM Investments Corp | Philippine Savings vs. Top Frontier Investment |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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