Correlation Between Philippine Savings and STI Education
Can any of the company-specific risk be diversified away by investing in both Philippine Savings and STI Education 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 STI Education 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 STI Education Systems, you can compare the effects of market volatilities on Philippine Savings and STI Education 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 STI Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and STI Education.
Diversification Opportunities for Philippine Savings and STI Education
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Philippine and STI is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and STI Education Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STI Education 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 STI Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STI Education Systems has no effect on the direction of Philippine Savings i.e., Philippine Savings and STI Education go up and down completely randomly.
Pair Corralation between Philippine Savings and STI Education
Assuming the 90 days trading horizon Philippine Savings is expected to generate 6.89 times less return on investment than STI Education. But when comparing it to its historical volatility, Philippine Savings Bank is 1.47 times less risky than STI Education. It trades about 0.04 of its potential returns per unit of risk. STI Education Systems is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 44.00 in STI Education Systems on August 24, 2024 and sell it today you would earn a total of 85.00 from holding STI Education Systems or generate 193.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.69% |
| Values | Daily Returns |
Philippine Savings Bank vs. STI Education Systems
Performance |
| Timeline |
| Philippine Savings Bank |
| STI Education Systems |
Philippine Savings and STI Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Savings and STI Education
The main advantage of trading using opposite Philippine Savings and STI Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Savings position performs unexpectedly, STI Education 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 STI Education will offset losses from the drop in STI Education's long position.| Philippine Savings vs. Apex Mining Co | Philippine Savings vs. Converge Information Communications | Philippine Savings vs. Figaro Coffee Group | Philippine Savings vs. Alliance Select Foods |
| STI Education vs. Metro Retail Stores | STI Education vs. Robinsons Retail Holdings | STI Education vs. Philippine Savings Bank | STI Education vs. Transpacific Broadband Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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