Correlation Between Ayala Land and Filinvest Land

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

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

Diversification Opportunities for Ayala Land and Filinvest Land

-0.05

Correlation Coefficient

Ayala Land  Filinvest Land

Good diversification

The 3 months correlation between Ayala and Filinvest is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ayala Land and Filinvest Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filinvest Land and Ayala Land 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 Land are associated (or correlated) with Filinvest Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filinvest Land has no effect on the direction of Ayala Land i.e., Ayala Land and Filinvest Land go up and down completely randomly.

Pair Corralation between Ayala Land and Filinvest Land

Assuming the 90 days trading horizon Ayala Land is expected to generate 1.8 times less return on investment than Filinvest Land. But when comparing it to its historical volatility, Ayala Land is 1.18 times less risky than Filinvest Land. It trades about 0.03 of its potential returns per unit of risk. Filinvest Land is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Filinvest Land on September 7, 2024 and sell it today you would earn a total of  8.00  from holding Filinvest Land or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ayala Land  vs.  Filinvest Land

Ayala Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ayala Land has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Filinvest Land

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Filinvest Land are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Filinvest Land exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ayala Land and Filinvest Land

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

The idea behind Ayala Land and Filinvest Land 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.