Correlation Between Ayala Corp and AyalaLand Logistics

Can any of the company-specific risk be diversified away by investing in both Ayala Corp and AyalaLand Logistics 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 Ayala Corp and AyalaLand Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ayala Corp and AyalaLand Logistics Holdings, you can compare the effects of market volatilities on Ayala Corp and AyalaLand Logistics 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 Ayala Corp with a short position of AyalaLand Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ayala Corp and AyalaLand Logistics.

Diversification Opportunities for Ayala Corp and AyalaLand Logistics

0.84

Correlation Coefficient

Ayala Corp  AyalaLand Logistics

Very poor diversification

The 3 months correlation between Ayala and AyalaLand is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ayala Corp and AyalaLand Logistics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AyalaLand Logistics and Ayala Corp 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 Ayala Corp are associated (or correlated) with AyalaLand Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AyalaLand Logistics has no effect on the direction of Ayala Corp i.e., Ayala Corp and AyalaLand Logistics go up and down completely randomly.

Pair Corralation between Ayala Corp and AyalaLand Logistics

Assuming the 90 days trading horizon Ayala Corp is expected to generate 0.91 times more return on investment than AyalaLand Logistics. However, Ayala Corp is 1.1 times less risky than AyalaLand Logistics. It trades about 0.0 of its potential returns per unit of risk. AyalaLand Logistics Holdings is currently generating about -0.04 per unit of risk. If you would invest  63,400  in Ayala Corp on September 14, 2024 and sell it today you would lose (800.00) from holding Ayala Corp or give up 1.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Ayala Corp  vs.  AyalaLand Logistics Holdings

Ayala Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ayala Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ayala Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

AyalaLand Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AyalaLand Logistics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, AyalaLand Logistics is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ayala Corp and AyalaLand Logistics

The main advantage of trading using opposite Ayala Corp and AyalaLand Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ayala Corp position performs unexpectedly, AyalaLand Logistics 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 AyalaLand Logistics will offset losses from the drop in AyalaLand Logistics' long position.

The idea behind Ayala Corp and AyalaLand Logistics Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.