Correlation Between Protect Pharmaceutical and Ayala

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

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

Diversification Opportunities for Protect Pharmaceutical and Ayala

-0.87

Correlation Coefficient

Protect Pharmaceutical  Ayala

Pay attention - limited upside

The 3 months correlation between Protect and Ayala is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Protect Pharmaceutical and Ayala in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala and Protect Pharmaceutical 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 Protect Pharmaceutical are associated (or correlated) with Ayala. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala has no effect on the direction of Protect Pharmaceutical i.e., Protect Pharmaceutical and Ayala go up and down completely randomly.

Pair Corralation between Protect Pharmaceutical and Ayala

Given the investment horizon of 90 days Protect Pharmaceutical is expected to generate 3.78 times more return on investment than Ayala. However, Protect Pharmaceutical is 3.78 times more volatile than Ayala. It trades about 0.23 of its potential returns per unit of risk. Ayala is currently generating about -0.13 per unit of risk. If you would invest  52.00  in Protect Pharmaceutical on December 28, 2024 and sell it today you would earn a total of  99.00  from holding Protect Pharmaceutical or generate 190.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Protect Pharmaceutical  vs.  Ayala

Protect Pharmaceutical

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Protect Pharmaceutical are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Protect Pharmaceutical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ayala

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ayala has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Protect Pharmaceutical and Ayala

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

The idea behind Protect Pharmaceutical and Ayala 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.