Correlation Between THE PHILIPPINE and Philippine Business
Can any of the company-specific risk be diversified away by investing in both THE PHILIPPINE and Philippine Business 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 Philippine Business 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 Philippine Business Bank, you can compare the effects of market volatilities on THE PHILIPPINE and Philippine Business 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 Philippine Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE PHILIPPINE and Philippine Business.
Diversification Opportunities for THE PHILIPPINE and Philippine Business
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between THE and Philippine is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding THE PHILIPPINE STOCK and Philippine Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philippine Business 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 Philippine Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philippine Business Bank has no effect on the direction of THE PHILIPPINE i.e., THE PHILIPPINE and Philippine Business go up and down completely randomly.
Pair Corralation between THE PHILIPPINE and Philippine Business
Assuming the 90 days trading horizon THE PHILIPPINE is expected to generate 4.21 times less return on investment than Philippine Business. But when comparing it to its historical volatility, THE PHILIPPINE STOCK is 2.78 times less risky than Philippine Business. It trades about 0.01 of its potential returns per unit of risk. Philippine Business Bank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 846.00 in Philippine Business Bank on August 24, 2024 and sell it today you would earn a total of 70.00 from holding Philippine Business Bank or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.7% |
| Values | Daily Returns |
THE PHILIPPINE STOCK vs. Philippine Business Bank
Performance |
| Timeline |
THE PHILIPPINE and Philippine Business Volatility Contrast
Predicted Return Density |
| Returns |
THE PHILIPPINE STOCK
Pair trading matchups for THE PHILIPPINE
Philippine Business Bank
Pair trading matchups for Philippine Business
Pair Trading with THE PHILIPPINE and Philippine Business
The main advantage of trading using opposite THE PHILIPPINE and Philippine Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THE PHILIPPINE position performs unexpectedly, Philippine Business 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 Philippine Business will offset losses from the drop in Philippine Business' long position.| THE PHILIPPINE vs. Philippine Savings Bank | THE PHILIPPINE vs. Asia United Bank | THE PHILIPPINE vs. BDO Unibank | THE PHILIPPINE vs. Rizal Commercial Banking |
| Philippine Business vs. Century Pacific Food | Philippine Business vs. Semirara Mining Corp | Philippine Business vs. Suntrust Home Developers | Philippine Business vs. Apex Mining Co |
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 CEOs Directory module to screen CEOs from public companies around the world.
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