Correlation Between Manila Electric and First Abacus

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Manila Electric and First Abacus 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 Manila Electric and First Abacus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manila Electric Co and First Abacus Financial, you can compare the effects of market volatilities on Manila Electric and First Abacus 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 Manila Electric with a short position of First Abacus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manila Electric and First Abacus.

Diversification Opportunities for Manila Electric and First Abacus

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Manila and First is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Manila Electric Co and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial and Manila Electric 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 Manila Electric Co are associated (or correlated) with First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of Manila Electric i.e., Manila Electric and First Abacus go up and down completely randomly.

Pair Corralation between Manila Electric and First Abacus

Assuming the 90 days trading horizon Manila Electric Co is expected to generate 0.38 times more return on investment than First Abacus. However, Manila Electric Co is 2.63 times less risky than First Abacus. It trades about 0.08 of its potential returns per unit of risk. First Abacus Financial is currently generating about 0.03 per unit of risk. If you would invest  42,560  in Manila Electric Co on September 18, 2024 and sell it today you would earn a total of  4,440  from holding Manila Electric Co or generate 10.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy28.57%
ValuesDaily Returns

Manila Electric Co  vs.  First Abacus Financial

 Performance 
       Timeline  
Manila Electric 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Manila Electric Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Manila Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.
First Abacus Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days First Abacus Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak technical and fundamental indicators, First Abacus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Manila Electric and First Abacus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Manila Electric and First Abacus

The main advantage of trading using opposite Manila Electric and First Abacus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manila Electric position performs unexpectedly, First Abacus 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 First Abacus will offset losses from the drop in First Abacus' long position.
The idea behind Manila Electric Co and First Abacus Financial 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.
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

Other Complementary Tools

Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios