Correlation Between THE PHILIPPINE and Swiss Leader
Can any of the company-specific risk be diversified away by investing in both THE PHILIPPINE and Swiss Leader 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 THE PHILIPPINE and Swiss Leader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THE PHILIPPINE STOCK and Swiss Leader Price, you can compare the effects of market volatilities on THE PHILIPPINE and Swiss Leader 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 THE PHILIPPINE with a short position of Swiss Leader. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE PHILIPPINE and Swiss Leader.
Diversification Opportunities for THE PHILIPPINE and Swiss Leader
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THE and Swiss is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding THE PHILIPPINE STOCK and Swiss Leader Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Leader Price and THE PHILIPPINE 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 THE PHILIPPINE STOCK are associated (or correlated) with Swiss Leader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Leader Price has no effect on the direction of THE PHILIPPINE i.e., THE PHILIPPINE and Swiss Leader go up and down completely randomly.
Pair Corralation between THE PHILIPPINE and Swiss Leader
Assuming the 90 days trading horizon THE PHILIPPINE STOCK is expected to under-perform the Swiss Leader. In addition to that, THE PHILIPPINE is 1.5 times more volatile than Swiss Leader Price. It trades about -0.09 of its total potential returns per unit of risk. Swiss Leader Price is currently generating about -0.06 per unit of volatility. If you would invest 187,455 in Swiss Leader Price on February 1, 2024 and sell it today you would lose (3,529) from holding Swiss Leader Price or give up 1.88% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.12% |
Values | Daily Returns |
THE PHILIPPINE STOCK vs. Swiss Leader Price
Performance |
Timeline |
THE PHILIPPINE and Swiss Leader Volatility Contrast
Predicted Return Density |
Returns |
THE PHILIPPINE STOCK
Pair trading matchups for THE PHILIPPINE
Swiss Leader Price
Pair trading matchups for Swiss Leader
Pair Trading with THE PHILIPPINE and Swiss Leader
The main advantage of trading using opposite THE PHILIPPINE and Swiss Leader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THE PHILIPPINE position performs unexpectedly, Swiss Leader 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 Swiss Leader will offset losses from the drop in Swiss Leader's long position.THE PHILIPPINE vs. Philippine Business Bank | THE PHILIPPINE vs. Security Bank Corp | THE PHILIPPINE vs. China Banking Corp | THE PHILIPPINE vs. Philex Mining Corp |
Swiss Leader vs. St Galler Kantonalbank | Swiss Leader vs. Basellandschaftliche Kantonalbank | Swiss Leader vs. Cicor Technologies | Swiss Leader vs. Zuger Kantonalbank |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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