Correlation Between Ayala and NN

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

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

Diversification Opportunities for Ayala and NN

0.43

Correlation Coefficient

Ayala  NN

Very weak diversification

The 3 months correlation between Ayala and NN is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ayala and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc and Ayala 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 are associated (or correlated) with NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Ayala i.e., Ayala and NN go up and down completely randomly.

Pair Corralation between Ayala and NN

Assuming the 90 days horizon Ayala is expected to generate 0.55 times more return on investment than NN. However, Ayala is 1.82 times less risky than NN. It trades about -0.13 of its potential returns per unit of risk. NN Inc is currently generating about -0.1 per unit of risk. If you would invest  1,135  in Ayala on December 27, 2024 and sell it today you would lose (215.00) from holding Ayala or give up 18.94% of portfolio value over 90 days.

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

Ayala  vs.  NN Inc

Ayala

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ayala has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

NN Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ayala and NN

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

The idea behind Ayala and NN Inc 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.