Correlation Between Marstons PLC and Jollibee Foods

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

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

Diversification Opportunities for Marstons PLC and Jollibee Foods

-0.3

Correlation Coefficient

Marstons PLC  Jollibee Foods

Very good diversification

The 3 months correlation between Marstons and Jollibee is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC and Jollibee Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jollibee Foods Corp and Marstons 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 Marstons PLC are associated (or correlated) with Jollibee Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jollibee Foods Corp has no effect on the direction of Marstons PLC i.e., Marstons PLC and Jollibee Foods go up and down completely randomly.

Pair Corralation between Marstons PLC and Jollibee Foods

Assuming the 90 days horizon Marstons PLC is expected to generate 0.53 times more return on investment than Jollibee Foods. However, Marstons PLC is 1.88 times less risky than Jollibee Foods. It trades about -0.01 of its potential returns per unit of risk. Jollibee Foods Corp is currently generating about -0.03 per unit of risk. If you would invest  56.00  in Marstons PLC on October 20, 2024 and sell it today you would lose (1.00) from holding Marstons PLC or give up 1.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Marstons PLC  vs.  Jollibee Foods Corp

Marstons PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marstons PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Marstons PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 fairly strong fundamental indicators, Jollibee Foods is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Marstons PLC and Jollibee Foods

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

The idea behind Marstons PLC and Jollibee Foods 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.