Correlation Between Jollibee Foods and Philippine Savings

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

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

Diversification Opportunities for Jollibee Foods and Philippine Savings

0.37

Correlation Coefficient

Jollibee Foods  Philippine Savings

Weak diversification

The 3 months correlation between Jollibee and Philippine is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Jollibee Foods Corp and Philippine Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philippine Savings Bank and Jollibee Foods 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 Jollibee Foods Corp are associated (or correlated) with Philippine Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philippine Savings Bank has no effect on the direction of Jollibee Foods i.e., Jollibee Foods and Philippine Savings go up and down completely randomly.

Pair Corralation between Jollibee Foods and Philippine Savings

Assuming the 90 days trading horizon Jollibee Foods Corp is expected to generate 0.96 times more return on investment than Philippine Savings. However, Jollibee Foods Corp is 1.04 times less risky than Philippine Savings. It trades about 0.06 of its potential returns per unit of risk. Philippine Savings Bank is currently generating about 0.05 per unit of risk. If you would invest  25,427  in Jollibee Foods Corp on September 12, 2024 and sell it today you would earn a total of  1,573  from holding Jollibee Foods Corp or generate 6.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Jollibee Foods Corp  vs.  Philippine Savings Bank

Jollibee Foods Corp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jollibee Foods Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Jollibee Foods may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Philippine Savings Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Philippine Savings Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Philippine Savings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Jollibee Foods and Philippine Savings

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

The idea behind Jollibee Foods Corp and Philippine Savings Bank 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.