Correlation Between Steel Partners and Ayala

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

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

Diversification Opportunities for Steel Partners and Ayala

0.58

Correlation Coefficient

Steel Partners  Ayala

Very weak diversification

The 3 months correlation between Steel and Ayala is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Steel Partners Holdings and Ayala in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala and Steel Partners 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 Steel Partners Holdings 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 Steel Partners i.e., Steel Partners and Ayala go up and down completely randomly.

Pair Corralation between Steel Partners and Ayala

Given the investment horizon of 90 days Steel Partners is expected to generate 5.24 times less return on investment than Ayala. In addition to that, Steel Partners is 1.89 times more volatile than Ayala. It trades about 0.01 of its total potential returns per unit of risk. Ayala is currently generating about 0.13 per unit of volatility. If you would invest  1,005  in Ayala on September 13, 2024 and sell it today you would earn a total of  130.00  from holding Ayala or generate 12.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Steel Partners Holdings  vs.  Ayala

Steel Partners Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Partners Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Steel Partners is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ayala

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ayala are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Ayala reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steel Partners and Ayala

The main advantage of trading using opposite Steel Partners and Ayala positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Partners 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 Steel Partners Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.