Correlation Between AC Energy and Lopez Holdings

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

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

Diversification Opportunities for AC Energy and Lopez Holdings

0.29

Correlation Coefficient

AC Energy  Lopez Holdings

Modest diversification

The 3 months correlation between ACEN and Lopez is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding AC Energy Philippines and Lopez Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lopez Holdings Corp and AC Energy 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 AC Energy Philippines are associated (or correlated) with Lopez Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lopez Holdings Corp has no effect on the direction of AC Energy i.e., AC Energy and Lopez Holdings go up and down completely randomly.

Pair Corralation between AC Energy and Lopez Holdings

Assuming the 90 days trading horizon AC Energy Philippines is expected to under-perform the Lopez Holdings. But the stock apears to be less risky and, when comparing its historical volatility, AC Energy Philippines is 1.93 times less risky than Lopez Holdings. The stock trades about -0.18 of its potential returns per unit of risk. The Lopez Holdings Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  284.00  in Lopez Holdings Corp on December 30, 2024 and sell it today you would lose (29.00) from holding Lopez Holdings Corp or give up 10.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.94%
Values	Daily Returns

AC Energy Philippines  vs.  Lopez Holdings Corp

AC Energy Philippines

Risk-Adjusted Performance

Very Weak

Over the last 90 days AC Energy Philippines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lopez Holdings Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with AC Energy and Lopez Holdings

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

The idea behind AC Energy Philippines and Lopez Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.