Correlation Between ABS-CBN Holdings and Armada Mercantile

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

By analyzing existing cross correlation between ABS CBN Holdings and Armada Mercantile, you can compare the effects of market volatilities on ABS-CBN Holdings and Armada Mercantile 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 ABS-CBN Holdings with a short position of Armada Mercantile. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABS-CBN Holdings and Armada Mercantile.

Diversification Opportunities for ABS-CBN Holdings and Armada Mercantile

0.0

Correlation Coefficient

ABS-CBN Holdings  Armada Mercantile

Pay attention - limited upside

The 3 months correlation between ABS-CBN and Armada is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ABS CBN Holdings and Armada Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Mercantile and ABS-CBN 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 ABS CBN Holdings are associated (or correlated) with Armada Mercantile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Mercantile has no effect on the direction of ABS-CBN Holdings i.e., ABS-CBN Holdings and Armada Mercantile go up and down completely randomly.

Pair Corralation between ABS-CBN Holdings and Armada Mercantile

If you would invest  30.00  in Armada Mercantile on December 30, 2024 and sell it today you would lose (10.00) from holding Armada Mercantile or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

ABS CBN Holdings  vs.  Armada Mercantile

ABS CBN Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days ABS CBN Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ABS-CBN Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Armada Mercantile

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Armada Mercantile are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Armada Mercantile reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ABS-CBN Holdings and Armada Mercantile

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

The idea behind ABS CBN Holdings and Armada Mercantile 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.