Correlation Between Halma PLC and Ayala Corp

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

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

Diversification Opportunities for Halma PLC and Ayala Corp

-0.15

Correlation Coefficient

Halma PLC  Ayala Corp

Good diversification

The 3 months correlation between Halma and Ayala is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Halma PLC and Ayala Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala Corp ADR and Halma PLC 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 Halma PLC are associated (or correlated) with Ayala Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala Corp ADR has no effect on the direction of Halma PLC i.e., Halma PLC and Ayala Corp go up and down completely randomly.

Pair Corralation between Halma PLC and Ayala Corp

Assuming the 90 days horizon Halma PLC is expected to generate 0.74 times more return on investment than Ayala Corp. However, Halma PLC is 1.35 times less risky than Ayala Corp. It trades about 0.0 of its potential returns per unit of risk. Ayala Corp ADR is currently generating about -0.14 per unit of risk. If you would invest  6,983  in Halma PLC on December 20, 2024 and sell it today you would lose (74.00) from holding Halma PLC or give up 1.06% of portfolio value over 90 days.

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

Halma PLC  vs.  Ayala Corp ADR

Halma PLC

Risk-Adjusted Performance

Very Weak

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

Ayala Corp ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ayala Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Halma PLC and Ayala Corp

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

The idea behind Halma PLC and Ayala Corp ADR 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.