Correlation Between THE PHILIPPINE and Asia United
Can any of the company-specific risk be diversified away by investing in both THE PHILIPPINE and Asia United 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 THE PHILIPPINE and Asia United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THE PHILIPPINE STOCK and Asia United Bank, you can compare the effects of market volatilities on THE PHILIPPINE and Asia United 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 THE PHILIPPINE with a short position of Asia United. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE PHILIPPINE and Asia United.
Diversification Opportunities for THE PHILIPPINE and Asia United
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between THE and Asia is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding THE PHILIPPINE STOCK and Asia United Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia United Bank and THE PHILIPPINE 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 THE PHILIPPINE STOCK are associated (or correlated) with Asia United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia United Bank has no effect on the direction of THE PHILIPPINE i.e., THE PHILIPPINE and Asia United go up and down completely randomly.
Pair Corralation between THE PHILIPPINE and Asia United
Assuming the 90 days trading horizon THE PHILIPPINE STOCK is expected to under-perform the Asia United. In addition to that, THE PHILIPPINE is 1.78 times more volatile than Asia United Bank. It trades about -0.26 of its total potential returns per unit of risk. Asia United Bank is currently generating about 0.07 per unit of volatility. If you would invest 6,180 in Asia United Bank on September 1, 2024 and sell it today you would earn a total of 70.00 from holding Asia United Bank or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THE PHILIPPINE STOCK vs. Asia United Bank
Performance |
| Timeline |
THE PHILIPPINE and Asia United Volatility Contrast
Predicted Return Density |
| Returns |
THE PHILIPPINE STOCK
Pair trading matchups for THE PHILIPPINE
Asia United Bank
Pair trading matchups for Asia United
Pair Trading with THE PHILIPPINE and Asia United
The main advantage of trading using opposite THE PHILIPPINE and Asia United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THE PHILIPPINE position performs unexpectedly, Asia United 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 Asia United will offset losses from the drop in Asia United's long position.| THE PHILIPPINE vs. Apex Mining Co | THE PHILIPPINE vs. Lepanto Consolidated Mining | THE PHILIPPINE vs. Premiere Entertainment | THE PHILIPPINE vs. Jollibee Foods Corp |
| Asia United vs. Metropolitan Bank Trust | Asia United vs. Philippine National Bank | Asia United vs. Philippine Savings Bank |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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