Correlation Between AyalaLand REIT and Century Pacific

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

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

Diversification Opportunities for AyalaLand REIT and Century Pacific

0.07

Correlation Coefficient

AyalaLand REIT  Century Pacific

Significant diversification

The 3 months correlation between AyalaLand and Century is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding AyalaLand REIT and Century Pacific Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Pacific Food and AyalaLand REIT 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 AyalaLand REIT are associated (or correlated) with Century Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Pacific Food has no effect on the direction of AyalaLand REIT i.e., AyalaLand REIT and Century Pacific go up and down completely randomly.

Pair Corralation between AyalaLand REIT and Century Pacific

Assuming the 90 days trading horizon AyalaLand REIT is expected to generate 0.62 times more return on investment than Century Pacific. However, AyalaLand REIT is 1.61 times less risky than Century Pacific. It trades about 0.05 of its potential returns per unit of risk. Century Pacific Food is currently generating about -0.05 per unit of risk. If you would invest  3,784  in AyalaLand REIT on December 30, 2024 and sell it today you would earn a total of  161.00  from holding AyalaLand REIT or generate 4.25% return on investment over 90 days.

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

AyalaLand REIT  vs.  Century Pacific Food

AyalaLand REIT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AyalaLand REIT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, AyalaLand REIT is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Century Pacific Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Century Pacific Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with AyalaLand REIT and Century Pacific

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

The idea behind AyalaLand REIT and Century Pacific Food 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.