Correlation Between STI Education and AyalaLand Logistics

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

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

Diversification Opportunities for STI Education and AyalaLand Logistics

-0.33

Correlation Coefficient

STI Education  AyalaLand Logistics

Very good diversification

The 3 months correlation between STI and AyalaLand is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding STI Education Systems and AyalaLand Logistics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AyalaLand Logistics and STI Education 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 STI Education Systems are associated (or correlated) with AyalaLand Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AyalaLand Logistics has no effect on the direction of STI Education i.e., STI Education and AyalaLand Logistics go up and down completely randomly.

Pair Corralation between STI Education and AyalaLand Logistics

Assuming the 90 days trading horizon STI Education Systems is expected to generate 1.67 times more return on investment than AyalaLand Logistics. However, STI Education is 1.67 times more volatile than AyalaLand Logistics Holdings. It trades about 0.36 of its potential returns per unit of risk. AyalaLand Logistics Holdings is currently generating about 0.11 per unit of risk. If you would invest  125.00  in STI Education Systems on October 10, 2024 and sell it today you would earn a total of  18.00  from holding STI Education Systems or generate 14.4% return on investment over 90 days.

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

STI Education Systems  vs.  AyalaLand Logistics Holdings

STI Education Systems

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STI Education Systems are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, STI Education exhibited solid returns over the last few months and may actually be approaching a breakup point.

AyalaLand Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AyalaLand Logistics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with STI Education and AyalaLand Logistics

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

The idea behind STI Education Systems and AyalaLand Logistics Holdings 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.