Correlation Between AMS Small and THE PHILIPPINE
Can any of the company-specific risk be diversified away by investing in both AMS Small and THE PHILIPPINE 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 AMS Small and THE PHILIPPINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMS Small Cap and THE PHILIPPINE STOCK, you can compare the effects of market volatilities on AMS Small and THE PHILIPPINE 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 AMS Small with a short position of THE PHILIPPINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMS Small and THE PHILIPPINE.
Diversification Opportunities for AMS Small and THE PHILIPPINE
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AMS and THE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding AMS Small Cap and THE PHILIPPINE STOCK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THE PHILIPPINE STOCK and AMS Small 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 AMS Small Cap are associated (or correlated) with THE PHILIPPINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THE PHILIPPINE STOCK has no effect on the direction of AMS Small i.e., AMS Small and THE PHILIPPINE go up and down completely randomly.
Pair Corralation between AMS Small and THE PHILIPPINE
Assuming the 90 days trading horizon AMS Small Cap is expected to under-perform the THE PHILIPPINE. But the index apears to be less risky and, when comparing its historical volatility, AMS Small Cap is 1.27 times less risky than THE PHILIPPINE. The index trades about -0.36 of its potential returns per unit of risk. The THE PHILIPPINE STOCK is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 682,706 in THE PHILIPPINE STOCK on February 4, 2024 and sell it today you would lose (21,151) from holding THE PHILIPPINE STOCK or give up 3.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
AMS Small Cap vs. THE PHILIPPINE STOCK
Performance |
Timeline |
AMS Small and THE PHILIPPINE Volatility Contrast
Predicted Return Density |
Returns |
AMS Small Cap
Pair trading matchups for AMS Small
THE PHILIPPINE STOCK
Pair trading matchups for THE PHILIPPINE
Pair Trading with AMS Small and THE PHILIPPINE
The main advantage of trading using opposite AMS Small and THE PHILIPPINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMS Small position performs unexpectedly, THE PHILIPPINE 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 THE PHILIPPINE will offset losses from the drop in THE PHILIPPINE's long position.AMS Small vs. AMG Advanced Metallurgical | AMS Small vs. Reinet Investments SCA | AMS Small vs. Accsys Technologies | AMS Small vs. Flow Traders BV |
THE PHILIPPINE vs. Allhome Corp | THE PHILIPPINE vs. STI Education Systems | THE PHILIPPINE vs. Lepanto Consolidated Mining | THE PHILIPPINE vs. Transpacific Broadband Group |
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.
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