Correlation Between Philippine Savings and Alliance Global

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

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

Diversification Opportunities for Philippine Savings and Alliance Global

-0.17

Correlation Coefficient

Philippine Savings  Alliance Global

Good diversification

The 3 months correlation between Philippine and Alliance is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and Alliance Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Global Group and Philippine Savings 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 Philippine Savings Bank are associated (or correlated) with Alliance Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Global Group has no effect on the direction of Philippine Savings i.e., Philippine Savings and Alliance Global go up and down completely randomly.

Pair Corralation between Philippine Savings and Alliance Global

Assuming the 90 days trading horizon Philippine Savings Bank is expected to generate 1.17 times more return on investment than Alliance Global. However, Philippine Savings is 1.17 times more volatile than Alliance Global Group. It trades about -0.03 of its potential returns per unit of risk. Alliance Global Group is currently generating about -0.03 per unit of risk. If you would invest  6,040  in Philippine Savings Bank on October 6, 2024 and sell it today you would lose (160.00) from holding Philippine Savings Bank or give up 2.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Philippine Savings Bank  vs.  Alliance Global Group

Philippine Savings Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alliance Global Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Global Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Philippine Savings and Alliance Global

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

The idea behind Philippine Savings Bank and Alliance Global Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.