Correlation Between Philippine Savings and Alliance Select

Can any of the company-specific risk be diversified away by investing in both Philippine Savings and Alliance Select 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 Philippine Savings and Alliance Select into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Philippine Savings Bank and Alliance Select Foods, you can compare the effects of market volatilities on Philippine Savings and Alliance Select 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 Philippine Savings with a short position of Alliance Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and Alliance Select.

Diversification Opportunities for Philippine Savings and Alliance Select

-0.67

Correlation Coefficient

Philippine Savings  Alliance Select

Excellent diversification

The 3 months correlation between Philippine and Alliance is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and Alliance Select Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Select Foods and Philippine Savings 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 Philippine Savings Bank are associated (or correlated) with Alliance Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Select Foods has no effect on the direction of Philippine Savings i.e., Philippine Savings and Alliance Select go up and down completely randomly.

Pair Corralation between Philippine Savings and Alliance Select

Assuming the 90 days trading horizon Philippine Savings Bank is expected to generate 0.62 times more return on investment than Alliance Select. However, Philippine Savings Bank is 1.6 times less risky than Alliance Select. It trades about 0.1 of its potential returns per unit of risk. Alliance Select Foods is currently generating about -0.07 per unit of risk. If you would invest  5,431  in Philippine Savings Bank on September 1, 2024 and sell it today you would earn a total of  569.00  from holding Philippine Savings Bank or generate 10.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	56.25%
Values	Daily Returns

Philippine Savings Bank  vs.  Alliance Select Foods

Philippine Savings Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Philippine Savings Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Philippine Savings may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Alliance Select Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Select Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Philippine Savings and Alliance Select

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

The idea behind Philippine Savings Bank and Alliance Select Foods 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..