Correlation Between Union Bank and Jollibee Foods

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

By analyzing existing cross correlation between Union Bank of and Jollibee Foods Corp, you can compare the effects of market volatilities on Union Bank 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 Union Bank with a short position of Jollibee Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bank and Jollibee Foods.

Diversification Opportunities for Union Bank and Jollibee Foods

0.64

Correlation Coefficient

Union Bank  Jollibee Foods

Poor diversification

The 3 months correlation between Union and Jollibee is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of 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 Union Bank 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 Union Bank of 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 Union Bank i.e., Union Bank and Jollibee Foods go up and down completely randomly.

Pair Corralation between Union Bank and Jollibee Foods

Assuming the 90 days trading horizon Union Bank of is expected to under-perform the Jollibee Foods. But the stock apears to be less risky and, when comparing its historical volatility, Union Bank of is 1.06 times less risky than Jollibee Foods. The stock trades about -0.14 of its potential returns per unit of risk. The Jollibee Foods Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  27,314  in Jollibee Foods Corp on October 10, 2024 and sell it today you would lose (914.00) from holding Jollibee Foods Corp or give up 3.35% of portfolio value over 90 days.

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

Union Bank of  vs.  Jollibee Foods Corp

Union Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Jollibee Foods Corp

Risk-Adjusted Performance

0 of 100

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 rather sound technical and fundamental indicators, Jollibee Foods is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Union Bank and Jollibee Foods

The main advantage of trading using opposite Union Bank and Jollibee Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Bank 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 Union Bank of 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.