Correlation Between THE PHILIPPINE and First Abacus
Can any of the company-specific risk be diversified away by investing in both THE PHILIPPINE and First Abacus 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 First Abacus 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 First Abacus Financial, you can compare the effects of market volatilities on THE PHILIPPINE and First Abacus 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 First Abacus. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE PHILIPPINE and First Abacus.
Diversification Opportunities for THE PHILIPPINE and First Abacus
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between THE and First is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding THE PHILIPPINE STOCK and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial 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 First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of THE PHILIPPINE i.e., THE PHILIPPINE and First Abacus go up and down completely randomly.
Pair Corralation between THE PHILIPPINE and First Abacus
Assuming the 90 days trading horizon THE PHILIPPINE is expected to generate 32.48 times less return on investment than First Abacus. But when comparing it to its historical volatility, THE PHILIPPINE STOCK is 6.93 times less risky than First Abacus. It trades about 0.01 of its potential returns per unit of risk. First Abacus Financial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 61.00 in First Abacus Financial on August 29, 2024 and sell it today you would earn a total of 8.00 from holding First Abacus Financial or generate 13.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 14.85% |
| Values | Daily Returns |
THE PHILIPPINE STOCK vs. First Abacus Financial
Performance |
| Timeline |
THE PHILIPPINE and First Abacus Volatility Contrast
Predicted Return Density |
| Returns |
THE PHILIPPINE STOCK
Pair trading matchups for THE PHILIPPINE
First Abacus Financial
Pair trading matchups for First Abacus
Pair Trading with THE PHILIPPINE and First Abacus
The main advantage of trading using opposite THE PHILIPPINE and First Abacus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THE PHILIPPINE position performs unexpectedly, First Abacus 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 First Abacus will offset losses from the drop in First Abacus' long position.| THE PHILIPPINE vs. Metro Retail Stores | THE PHILIPPINE vs. Manila Mining Corp | THE PHILIPPINE vs. Atlas Consolidated Mining | THE PHILIPPINE vs. Crown Asia Chemicals |
| First Abacus vs. Bright Kindle Resources | First Abacus vs. Allhome Corp | First Abacus vs. Jollibee Foods Corp | First Abacus vs. LFM Properties 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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