Correlation Between 8990 Holdings and Ayala Land

Can any of the company-specific risk be diversified away by investing in both 8990 Holdings 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 8990 Holdings and Ayala Land into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 8990 Holdings and Ayala Land, you can compare the effects of market volatilities on 8990 Holdings 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 8990 Holdings with a short position of Ayala Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of 8990 Holdings and Ayala Land.

Diversification Opportunities for 8990 Holdings and Ayala Land

0.62

Correlation Coefficient

8990 Holdings  Ayala Land

Poor diversification

The 3 months correlation between 8990 and Ayala is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding 8990 Holdings and Ayala Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala Land and 8990 Holdings 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 8990 Holdings 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 8990 Holdings i.e., 8990 Holdings and Ayala Land go up and down completely randomly.

Pair Corralation between 8990 Holdings and Ayala Land

Assuming the 90 days trading horizon 8990 Holdings is expected to generate 1.21 times more return on investment than Ayala Land. However, 8990 Holdings is 1.21 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 -0.05 per unit of risk. If you would invest  930.00  in 8990 Holdings on September 23, 2024 and sell it today you would lose (56.00) from holding 8990 Holdings or give up 6.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	80.16%
Values	Daily Returns

8990 Holdings  vs.  Ayala Land

8990 Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 8990 Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, 8990 Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ayala Land

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with 8990 Holdings and Ayala Land

The main advantage of trading using opposite 8990 Holdings and Ayala Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 8990 Holdings 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 8990 Holdings 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.