Correlation Between THE PHILIPPINE and Alliance Select
Can any of the company-specific risk be diversified away by investing in both THE PHILIPPINE and Alliance Select 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 Alliance Select 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 Alliance Select Foods, you can compare the effects of market volatilities on THE PHILIPPINE and Alliance Select 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 Alliance Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE PHILIPPINE and Alliance Select.
Diversification Opportunities for THE PHILIPPINE and Alliance Select
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between THE and Alliance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding THE PHILIPPINE STOCK and Alliance Select Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Select Foods 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 Alliance Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Select Foods has no effect on the direction of THE PHILIPPINE i.e., THE PHILIPPINE and Alliance Select go up and down completely randomly.
Pair Corralation between THE PHILIPPINE and Alliance Select
Assuming the 90 days trading horizon THE PHILIPPINE STOCK is expected to under-perform the Alliance Select. But the index apears to be less risky and, when comparing its historical volatility, THE PHILIPPINE STOCK is 2.03 times less risky than Alliance Select. The index trades about -0.3 of its potential returns per unit of risk. The Alliance Select Foods is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 39.00 in Alliance Select Foods on August 31, 2024 and sell it today you would lose (1.00) from holding Alliance Select Foods or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 52.38% |
| Values | Daily Returns |
THE PHILIPPINE STOCK vs. Alliance Select Foods
Performance |
| Timeline |
THE PHILIPPINE and Alliance Select Volatility Contrast
Predicted Return Density |
| Returns |
THE PHILIPPINE STOCK
Pair trading matchups for THE PHILIPPINE
Alliance Select Foods
Pair trading matchups for Alliance Select
Pair Trading with THE PHILIPPINE and Alliance Select
The main advantage of trading using opposite THE PHILIPPINE and Alliance Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THE PHILIPPINE position performs unexpectedly, Alliance Select 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 Alliance Select will offset losses from the drop in Alliance Select's long position.| THE PHILIPPINE vs. Semirara Mining Corp | THE PHILIPPINE vs. Philippine Savings Bank | THE PHILIPPINE vs. SM Investments Corp | THE PHILIPPINE vs. Converge Information Communications |
| Alliance Select vs. Converge Information Communications | Alliance Select vs. COL Financial Group | Alliance Select vs. Globe Telecom | Alliance Select vs. Cebu Air Preferred |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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