Correlation Between Jollibee Foods and PXP Energy

Can any of the company-specific risk be diversified away by investing in both Jollibee Foods and PXP Energy 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 PXP Energy 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 PXP Energy Corp, you can compare the effects of market volatilities on Jollibee Foods and PXP Energy 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 PXP Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jollibee Foods and PXP Energy.

Diversification Opportunities for Jollibee Foods and PXP Energy

0.41

Correlation Coefficient

Jollibee Foods  PXP Energy

Very weak diversification

The 3 months correlation between Jollibee and PXP is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Jollibee Foods Corp and PXP Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PXP Energy Corp 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 PXP Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PXP Energy Corp has no effect on the direction of Jollibee Foods i.e., Jollibee Foods and PXP Energy go up and down completely randomly.

Pair Corralation between Jollibee Foods and PXP Energy

Assuming the 90 days trading horizon Jollibee Foods Corp is expected to generate 0.45 times more return on investment than PXP Energy. However, Jollibee Foods Corp is 2.2 times less risky than PXP Energy. It trades about 0.06 of its potential returns per unit of risk. PXP Energy Corp is currently generating about 0.0 per unit of risk. If you would invest  21,037  in Jollibee Foods Corp on October 8, 2024 and sell it today you would earn a total of  5,623  from holding Jollibee Foods Corp or generate 26.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.64%
Values	Daily Returns

Jollibee Foods Corp  vs.  PXP Energy Corp

Jollibee Foods Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

PXP Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PXP Energy Corp 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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Jollibee Foods and PXP Energy

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

The idea behind Jollibee Foods Corp and PXP Energy Corp 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.