Correlation Between PXP Energy and Jollibee Foods

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Can any of the company-specific risk be diversified away by investing in both PXP Energy 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 PXP Energy and Jollibee Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PXP Energy Corp and Jollibee Foods Corp, you can compare the effects of market volatilities on PXP Energy 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 PXP Energy with a short position of Jollibee Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of PXP Energy and Jollibee Foods.

Diversification Opportunities for PXP Energy and Jollibee Foods

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between PXP and Jollibee is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding PXP Energy Corp 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 PXP Energy 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 PXP Energy Corp 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 PXP Energy i.e., PXP Energy and Jollibee Foods go up and down completely randomly.

Pair Corralation between PXP Energy and Jollibee Foods

Assuming the 90 days trading horizon PXP Energy Corp is expected to generate 2.09 times more return on investment than Jollibee Foods. However, PXP Energy is 2.09 times more volatile than Jollibee Foods Corp. It trades about 0.05 of its potential returns per unit of risk. Jollibee Foods Corp is currently generating about -0.31 per unit of risk. If you would invest  288.00  in PXP Energy Corp on October 23, 2024 and sell it today you would earn a total of  6.00  from holding PXP Energy Corp or generate 2.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy94.12%
ValuesDaily Returns

PXP Energy Corp  vs.  Jollibee Foods Corp

 Performance 
       Timeline  
PXP Energy Corp 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days PXP Energy Corp 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.
Jollibee Foods Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 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.

PXP Energy and Jollibee Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PXP Energy and Jollibee Foods

The main advantage of trading using opposite PXP Energy and Jollibee Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PXP Energy 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 PXP Energy Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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