Correlation Between Filinvest Development and Ayala Land

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

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

Diversification Opportunities for Filinvest Development and Ayala Land

0.62

Correlation Coefficient

Filinvest Development  Ayala Land

Poor diversification

The 3 months correlation between Filinvest and Ayala is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Filinvest Development Coprorat and Ayala Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala Land and Filinvest Development 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 Filinvest Development Coproration are associated (or correlated) with Ayala Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala Land has no effect on the direction of Filinvest Development i.e., Filinvest Development and Ayala Land go up and down completely randomly.

Pair Corralation between Filinvest Development and Ayala Land

Assuming the 90 days trading horizon Filinvest Development Coproration is expected to generate 1.22 times more return on investment than Ayala Land. However, Filinvest Development is 1.22 times more volatile than Ayala Land. It trades about 0.01 of its potential returns per unit of risk. Ayala Land is currently generating about -0.07 per unit of risk. If you would invest  495.00  in Filinvest Development Coproration on December 31, 2024 and sell it today you would lose (5.00) from holding Filinvest Development Coproration or give up 1.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	64.52%
Values	Daily Returns

Filinvest Development Coprorat  vs.  Ayala Land

Filinvest Development

Risk-Adjusted Performance

Very Weak

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

Ayala Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ayala Land has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Filinvest Development and Ayala Land

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

The idea behind Filinvest Development Coproration and Ayala Land 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.