Correlation Between Concepcion Industrial and First Philippine

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

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

Diversification Opportunities for Concepcion Industrial and First Philippine

-0.43

Correlation Coefficient

Concepcion Industrial  First Philippine

Very good diversification

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

Pair Corralation between Concepcion Industrial and First Philippine

Assuming the 90 days trading horizon Concepcion Industrial Corp is expected to generate 1.34 times more return on investment than First Philippine. However, Concepcion Industrial is 1.34 times more volatile than First Philippine Holdings. It trades about 0.07 of its potential returns per unit of risk. First Philippine Holdings is currently generating about -0.01 per unit of risk. If you would invest  1,338  in Concepcion Industrial Corp on December 24, 2024 and sell it today you would earn a total of  76.00  from holding Concepcion Industrial Corp or generate 5.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.22%
Values	Daily Returns

Concepcion Industrial Corp  vs.  First Philippine Holdings

Concepcion Industrial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Concepcion Industrial Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Concepcion Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

First Philippine Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Concepcion Industrial and First Philippine

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

The idea behind Concepcion Industrial Corp and First Philippine Holdings 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.