Correlation Between THE PHILIPPINE and Bright Kindle
Can any of the company-specific risk be diversified away by investing in both THE PHILIPPINE and Bright Kindle 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 Bright Kindle 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 Bright Kindle Resources, you can compare the effects of market volatilities on THE PHILIPPINE and Bright Kindle 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 Bright Kindle. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE PHILIPPINE and Bright Kindle.
Diversification Opportunities for THE PHILIPPINE and Bright Kindle
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between THE and Bright is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding THE PHILIPPINE STOCK and Bright Kindle Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Kindle Resources 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 Bright Kindle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Kindle Resources has no effect on the direction of THE PHILIPPINE i.e., THE PHILIPPINE and Bright Kindle go up and down completely randomly.
Pair Corralation between THE PHILIPPINE and Bright Kindle
Assuming the 90 days trading horizon THE PHILIPPINE STOCK is expected to generate 0.45 times more return on investment than Bright Kindle. However, THE PHILIPPINE STOCK is 2.21 times less risky than Bright Kindle. It trades about -0.26 of its potential returns per unit of risk. Bright Kindle Resources is currently generating about -0.23 per unit of risk. If you would invest 714,296 in THE PHILIPPINE STOCK on September 1, 2024 and sell it today you would lose (52,911) from holding THE PHILIPPINE STOCK or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
THE PHILIPPINE STOCK vs. Bright Kindle Resources
Performance |
| Timeline |
THE PHILIPPINE and Bright Kindle Volatility Contrast
Predicted Return Density |
| Returns |
THE PHILIPPINE STOCK
Pair trading matchups for THE PHILIPPINE
Bright Kindle Resources
Pair trading matchups for Bright Kindle
Pair Trading with THE PHILIPPINE and Bright Kindle
The main advantage of trading using opposite THE PHILIPPINE and Bright Kindle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THE PHILIPPINE position performs unexpectedly, Bright Kindle 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 Bright Kindle will offset losses from the drop in Bright Kindle'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 |
| Bright Kindle vs. Allhome Corp | Bright Kindle vs. LFM Properties Corp | Bright Kindle vs. Altus Property Ventures | Bright Kindle vs. Monde Nissin Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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