Correlation Between Jollibee Foods and Alliance Select

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

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

Diversification Opportunities for Jollibee Foods and Alliance Select

-0.3

Correlation Coefficient

Jollibee Foods  Alliance Select

Very good diversification

The 3 months correlation between Jollibee and Alliance is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Jollibee Foods Corp 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 Jollibee Foods 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 Jollibee Foods Corp 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 Jollibee Foods i.e., Jollibee Foods and Alliance Select go up and down completely randomly.

Pair Corralation between Jollibee Foods and Alliance Select

Assuming the 90 days trading horizon Jollibee Foods Corp is expected to generate 0.78 times more return on investment than Alliance Select. However, Jollibee Foods Corp is 1.28 times less risky than Alliance Select. It trades about 0.11 of its potential returns per unit of risk. Alliance Select Foods is currently generating about -0.15 per unit of risk. If you would invest  25,824  in Jollibee Foods Corp on September 12, 2024 and sell it today you would earn a total of  1,176  from holding Jollibee Foods Corp or generate 4.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.55%
Values	Daily Returns

Jollibee Foods Corp  vs.  Alliance Select Foods

Jollibee Foods Corp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jollibee Foods Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Jollibee Foods may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Jollibee Foods and Alliance Select

The main advantage of trading using opposite Jollibee Foods and Alliance Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jollibee Foods 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 Jollibee Foods Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.