Correlation Between BDO Unibank and Alliance Select
Can any of the company-specific risk be diversified away by investing in both BDO Unibank and Alliance Select 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 Alliance Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BDO Unibank and Alliance Select Foods, you can compare the effects of market volatilities on BDO Unibank and Alliance Select 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 Alliance Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and Alliance Select.
Diversification Opportunities for BDO Unibank and Alliance Select
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between BDO and Alliance is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and Alliance Select Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Select Foods 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 Alliance Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Select Foods has no effect on the direction of BDO Unibank i.e., BDO Unibank and Alliance Select go up and down completely randomly.
Pair Corralation between BDO Unibank and Alliance Select
Assuming the 90 days trading horizon BDO Unibank is expected to generate 0.44 times more return on investment than Alliance Select. However, BDO Unibank is 2.25 times less risky than Alliance Select. It trades about 0.05 of its potential returns per unit of risk. Alliance Select Foods is currently generating about -0.01 per unit of risk. If you would invest 10,766 in BDO Unibank on September 3, 2024 and sell it today you would earn a total of 4,684 from holding BDO Unibank or generate 43.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 58.3% |
| Values | Daily Returns |
BDO Unibank vs. Alliance Select Foods
Performance |
| Timeline |
| BDO Unibank |
| Alliance Select Foods |
BDO Unibank and Alliance Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BDO Unibank and Alliance Select
The main advantage of trading using opposite BDO Unibank and Alliance Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BDO Unibank position performs unexpectedly, Alliance Select 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 Alliance Select will offset losses from the drop in Alliance Select's long position.| BDO Unibank vs. COL Financial Group | BDO Unibank vs. Rizal Commercial Banking | BDO Unibank vs. SM Investments Corp | BDO Unibank vs. STI Education Systems |
| Alliance Select vs. San Miguel Pure | Alliance Select vs. Del Monte Pacific | Alliance Select vs. GT Capital Holdings | Alliance Select vs. Allhome Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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