Correlation Between Dominos Pizza and Jollibee Foods

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

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

Diversification Opportunities for Dominos Pizza and Jollibee Foods

-0.21

Correlation Coefficient

Dominos Pizza  Jollibee Foods

Very good diversification

The 3 months correlation between Dominos and Jollibee is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza Group and Jollibee Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jollibee Foods and Dominos Pizza 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 Dominos Pizza Group are associated (or correlated) with Jollibee Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jollibee Foods has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Jollibee Foods go up and down completely randomly.

Pair Corralation between Dominos Pizza and Jollibee Foods

Assuming the 90 days horizon Dominos Pizza Group is expected to under-perform the Jollibee Foods. But the pink sheet apears to be less risky and, when comparing its historical volatility, Dominos Pizza Group is 2.47 times less risky than Jollibee Foods. The pink sheet trades about -0.34 of its potential returns per unit of risk. The Jollibee Foods is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  445.00  in Jollibee Foods on October 8, 2024 and sell it today you would earn a total of  18.00  from holding Jollibee Foods or generate 4.04% return on investment over 90 days.

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

Dominos Pizza Group  vs.  Jollibee Foods

Dominos Pizza Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dominos Pizza Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Dominos Pizza is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jollibee Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jollibee Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Jollibee Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dominos Pizza and Jollibee Foods

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

The idea behind Dominos Pizza Group and Jollibee Foods 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.