Correlation Between COL Financial and AC Energy

Can any of the company-specific risk be diversified away by investing in both COL Financial and AC Energy 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 COL Financial and AC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COL Financial Group and AC Energy Philippines, you can compare the effects of market volatilities on COL Financial and AC Energy 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 COL Financial with a short position of AC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of COL Financial and AC Energy.

Diversification Opportunities for COL Financial and AC Energy

0.52

Correlation Coefficient

COL Financial  AC Energy

Very weak diversification

The 3 months correlation between COL and ACEN is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding COL Financial Group and AC Energy Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AC Energy Philippines and COL Financial 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 COL Financial Group are associated (or correlated) with AC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AC Energy Philippines has no effect on the direction of COL Financial i.e., COL Financial and AC Energy go up and down completely randomly.

Pair Corralation between COL Financial and AC Energy

Assuming the 90 days trading horizon COL Financial Group is expected to generate 1.0 times more return on investment than AC Energy. However, COL Financial Group is 1.0 times less risky than AC Energy. It trades about -0.16 of its potential returns per unit of risk. AC Energy Philippines is currently generating about -0.26 per unit of risk. If you would invest  184.00  in COL Financial Group on September 15, 2024 and sell it today you would lose (18.00) from holding COL Financial Group or give up 9.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

COL Financial Group  vs.  AC Energy Philippines

COL Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

AC Energy Philippines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AC Energy Philippines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with COL Financial and AC Energy

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

The idea behind COL Financial Group and AC Energy Philippines 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.