Correlation Between Philippine Savings and Atlas Consolidated

Can any of the company-specific risk be diversified away by investing in both Philippine Savings and Atlas Consolidated 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 Atlas Consolidated 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 Atlas Consolidated Mining, you can compare the effects of market volatilities on Philippine Savings and Atlas Consolidated 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 Atlas Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and Atlas Consolidated.

Diversification Opportunities for Philippine Savings and Atlas Consolidated

0.05

Correlation Coefficient

Philippine Savings  Atlas Consolidated

Significant diversification

The 3 months correlation between Philippine and Atlas is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and Atlas Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Consolidated Mining 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 Atlas Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Consolidated Mining has no effect on the direction of Philippine Savings i.e., Philippine Savings and Atlas Consolidated go up and down completely randomly.

Pair Corralation between Philippine Savings and Atlas Consolidated

Assuming the 90 days trading horizon Philippine Savings is expected to generate 9.6 times less return on investment than Atlas Consolidated. But when comparing it to its historical volatility, Philippine Savings Bank is 3.2 times less risky than Atlas Consolidated. It trades about 0.04 of its potential returns per unit of risk. Atlas Consolidated Mining is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  420.00  in Atlas Consolidated Mining on December 23, 2024 and sell it today you would earn a total of  79.00  from holding Atlas Consolidated Mining or generate 18.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Philippine Savings Bank  vs.  Atlas Consolidated Mining

Philippine Savings Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Philippine Savings Bank are ranked lower than 2 (%) 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.

Atlas Consolidated Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Consolidated Mining are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Atlas Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Philippine Savings and Atlas Consolidated

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

The idea behind Philippine Savings Bank and Atlas Consolidated Mining 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.

Check out your portfolio center.

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.