Correlation Between Philex Mining and Ayala Land
Can any of the company-specific risk be diversified away by investing in both Philex Mining and Ayala Land 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 Philex Mining and Ayala Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philex Mining Corp and Ayala Land, you can compare the effects of market volatilities on Philex Mining and Ayala Land 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 Philex Mining with a short position of Ayala Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philex Mining and Ayala Land.
Diversification Opportunities for Philex Mining and Ayala Land
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Philex and Ayala is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Philex Mining Corp and Ayala Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala Land and Philex Mining 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 Philex Mining Corp are associated (or correlated) with Ayala Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala Land has no effect on the direction of Philex Mining i.e., Philex Mining and Ayala Land go up and down completely randomly.
Pair Corralation between Philex Mining and Ayala Land
Assuming the 90 days trading horizon Philex Mining Corp is expected to under-perform the Ayala Land. But the stock apears to be less risky and, when comparing its historical volatility, Philex Mining Corp is 1.09 times less risky than Ayala Land. The stock trades about -0.37 of its potential returns per unit of risk. The Ayala Land is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 3,241 in Ayala Land on September 1, 2024 and sell it today you would lose (381.00) from holding Ayala Land or give up 11.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Philex Mining Corp vs. Ayala Land
Performance |
| Timeline |
| Philex Mining Corp |
| Ayala Land |
Philex Mining and Ayala Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philex Mining and Ayala Land
The main advantage of trading using opposite Philex Mining and Ayala Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philex Mining position performs unexpectedly, Ayala Land 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 Ayala Land will offset losses from the drop in Ayala Land's long position.| Philex Mining vs. Figaro Coffee Group | Philex Mining vs. Lepanto Consolidated Mining | Philex Mining vs. Cebu Air Preferred | Philex Mining vs. SM Investments Corp |
| Ayala Land vs. BDO Unibank | Ayala Land vs. Security Bank Corp | Ayala Land vs. Lepanto Consolidated Mining | Ayala Land vs. Philex Mining 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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