Correlation Between Ayala Corp and LFM Properties

Can any of the company-specific risk be diversified away by investing in both Ayala Corp and LFM Properties 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 Ayala Corp and LFM Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Ayala Corp and LFM Properties

0.0

Correlation Coefficient

Ayala Corp  LFM Properties

Pay attention - limited upside

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

Pair Corralation between Ayala Corp and LFM Properties

If you would invest  4.40  in LFM Properties Corp on December 29, 2024 and sell it today you would earn a total of  0.20  from holding LFM Properties Corp or generate 4.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ayala Corp  vs.  LFM Properties Corp

Ayala Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ayala Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ayala Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

LFM Properties Corp

Risk-Adjusted Performance

Modest

Over the last 90 days LFM Properties Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady technical and fundamental indicators, LFM Properties exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ayala Corp and LFM Properties

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

The idea behind Ayala Corp and LFM Properties Corp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.