Correlation Between Philippine Savings and Easycall Communications

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

Diversification Opportunities for Philippine Savings and Easycall Communications

-0.04

Correlation Coefficient

Philippine Savings  Easycall Communications

Good diversification

The 3 months correlation between Philippine and Easycall is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and Easycall Communications Philip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easycall Communications 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 Easycall Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easycall Communications has no effect on the direction of Philippine Savings i.e., Philippine Savings and Easycall Communications go up and down completely randomly.

Pair Corralation between Philippine Savings and Easycall Communications

Assuming the 90 days trading horizon Philippine Savings is expected to generate 10.47 times less return on investment than Easycall Communications. But when comparing it to its historical volatility, Philippine Savings Bank is 7.28 times less risky than Easycall Communications. It trades about 0.04 of its potential returns per unit of risk. Easycall Communications Philippines is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  210.00  in Easycall Communications Philippines on October 5, 2024 and sell it today you would lose (5.00) from holding Easycall Communications Philippines or give up 2.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.42%
Values	Daily Returns

Philippine Savings Bank  vs.  Easycall Communications Philip

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Easycall Communications

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Easycall Communications Philippines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady technical and fundamental indicators, Easycall Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Philippine Savings and Easycall Communications

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

The idea behind Philippine Savings Bank and Easycall Communications Philippines 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.