Correlation Between THE PHILIPPINE and Emperador
Can any of the company-specific risk be diversified away by investing in both THE PHILIPPINE and Emperador 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 Emperador 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 Emperador, you can compare the effects of market volatilities on THE PHILIPPINE and Emperador 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 Emperador. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE PHILIPPINE and Emperador.
Diversification Opportunities for THE PHILIPPINE and Emperador
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between THE and Emperador is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding THE PHILIPPINE STOCK and Emperador in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emperador 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 Emperador. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emperador has no effect on the direction of THE PHILIPPINE i.e., THE PHILIPPINE and Emperador go up and down completely randomly.
Pair Corralation between THE PHILIPPINE and Emperador
Assuming the 90 days trading horizon THE PHILIPPINE STOCK is expected to under-perform the Emperador. In addition to that, THE PHILIPPINE is 4.25 times more volatile than Emperador. It trades about -0.08 of its total potential returns per unit of risk. Emperador is currently generating about -0.15 per unit of volatility. If you would invest 1,818 in Emperador on September 13, 2024 and sell it today you would lose (18.00) from holding Emperador or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
THE PHILIPPINE STOCK vs. Emperador
Performance |
| Timeline |
THE PHILIPPINE and Emperador Volatility Contrast
Predicted Return Density |
| Returns |
THE PHILIPPINE STOCK
Pair trading matchups for THE PHILIPPINE
Emperador
Pair trading matchups for Emperador
Pair Trading with THE PHILIPPINE and Emperador
The main advantage of trading using opposite THE PHILIPPINE and Emperador positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THE PHILIPPINE position performs unexpectedly, Emperador 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 Emperador will offset losses from the drop in Emperador's long position.| THE PHILIPPINE vs. Converge Information Communications | THE PHILIPPINE vs. Integrated Micro Electronics | THE PHILIPPINE vs. Top Frontier Investment | THE PHILIPPINE vs. Philippine Savings Bank |
| Emperador vs. SM Investments Corp | Emperador vs. San Miguel Pure | Emperador vs. Ayala Corp | Emperador vs. Ayala Land |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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