Correlation Between Cirtek Holdings and AyalaLand REIT

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

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

Diversification Opportunities for Cirtek Holdings and AyalaLand REIT

-0.35

Correlation Coefficient

Cirtek Holdings  AyalaLand REIT

Very good diversification

The 3 months correlation between Cirtek and AyalaLand is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cirtek Holdings Philippines and AyalaLand REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AyalaLand REIT and Cirtek Holdings 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 Cirtek Holdings Philippines are associated (or correlated) with AyalaLand REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AyalaLand REIT has no effect on the direction of Cirtek Holdings i.e., Cirtek Holdings and AyalaLand REIT go up and down completely randomly.

Pair Corralation between Cirtek Holdings and AyalaLand REIT

Assuming the 90 days trading horizon Cirtek Holdings Philippines is expected to generate 4.46 times more return on investment than AyalaLand REIT. However, Cirtek Holdings is 4.46 times more volatile than AyalaLand REIT. It trades about 0.01 of its potential returns per unit of risk. AyalaLand REIT is currently generating about 0.03 per unit of risk. If you would invest  74.00  in Cirtek Holdings Philippines on September 23, 2024 and sell it today you would lose (18.00) from holding Cirtek Holdings Philippines or give up 24.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	43.71%
Values	Daily Returns

Cirtek Holdings Philippines  vs.  AyalaLand REIT

Cirtek Holdings Phil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cirtek Holdings Philippines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

AyalaLand REIT

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AyalaLand REIT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, AyalaLand REIT 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 Cirtek Holdings and AyalaLand REIT

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

The idea behind Cirtek Holdings Philippines and AyalaLand REIT 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.