Correlation Between BDO Unibank and DMCI Holdings
Can any of the company-specific risk be diversified away by investing in both BDO Unibank and DMCI Holdings 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 BDO Unibank and DMCI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BDO Unibank and DMCI Holdings, you can compare the effects of market volatilities on BDO Unibank and DMCI Holdings 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 BDO Unibank with a short position of DMCI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and DMCI Holdings.
Diversification Opportunities for BDO Unibank and DMCI Holdings
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BDO and DMCI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and DMCI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DMCI Holdings and BDO Unibank 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 BDO Unibank are associated (or correlated) with DMCI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DMCI Holdings has no effect on the direction of BDO Unibank i.e., BDO Unibank and DMCI Holdings go up and down completely randomly.
Pair Corralation between BDO Unibank and DMCI Holdings
Assuming the 90 days trading horizon BDO Unibank is expected to generate 2.3 times less return on investment than DMCI Holdings. In addition to that, BDO Unibank is 1.02 times more volatile than DMCI Holdings. It trades about 0.02 of its total potential returns per unit of risk. DMCI Holdings is currently generating about 0.06 per unit of volatility. If you would invest 791.00 in DMCI Holdings on August 26, 2024 and sell it today you would earn a total of 241.00 from holding DMCI Holdings or generate 30.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BDO Unibank vs. DMCI Holdings
Performance |
| Timeline |
| BDO Unibank |
| DMCI Holdings |
BDO Unibank and DMCI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BDO Unibank and DMCI Holdings
The main advantage of trading using opposite BDO Unibank and DMCI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BDO Unibank position performs unexpectedly, DMCI Holdings 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 DMCI Holdings will offset losses from the drop in DMCI Holdings' long position.| BDO Unibank vs. Metro Retail Stores | BDO Unibank vs. Transpacific Broadband Group | BDO Unibank vs. Jollibee Foods Corp | BDO Unibank vs. Pacificonline Systems |
| DMCI Holdings vs. COL Financial Group | DMCI Holdings vs. Robinsons Retail Holdings | DMCI Holdings vs. STI Education Systems | DMCI Holdings vs. Sun Life Financial |
Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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