Correlation Between Aboitiz Power and AC Energy

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

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

Diversification Opportunities for Aboitiz Power and AC Energy

-0.65

Correlation Coefficient

Aboitiz Power  AC Energy

Excellent diversification

The 3 months correlation between Aboitiz and ACEN is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aboitiz Power Corp and AC Energy Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AC Energy Philippines and Aboitiz Power 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 Aboitiz Power Corp are associated (or correlated) with AC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AC Energy Philippines has no effect on the direction of Aboitiz Power i.e., Aboitiz Power and AC Energy go up and down completely randomly.

Pair Corralation between Aboitiz Power and AC Energy

Assuming the 90 days trading horizon Aboitiz Power Corp is expected to generate 0.73 times more return on investment than AC Energy. However, Aboitiz Power Corp is 1.37 times less risky than AC Energy. It trades about 0.05 of its potential returns per unit of risk. AC Energy Philippines is currently generating about -0.18 per unit of risk. If you would invest  3,643  in Aboitiz Power Corp on December 30, 2024 and sell it today you would earn a total of  207.00  from holding Aboitiz Power Corp or generate 5.68% return on investment over 90 days.

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

Aboitiz Power Corp  vs.  AC Energy Philippines

Aboitiz Power Corp

Risk-Adjusted Performance

Insignificant

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

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.

Pair Trading with Aboitiz Power and AC Energy

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

The idea behind Aboitiz Power Corp and AC Energy Philippines 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.