Correlation Between BDO Unibank and Ayala Corp
Can any of the company-specific risk be diversified away by investing in both BDO Unibank and Ayala Corp 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 Ayala Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BDO Unibank ADR and Ayala Corp ADR, you can compare the effects of market volatilities on BDO Unibank and Ayala Corp 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 Ayala Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and Ayala Corp.
Diversification Opportunities for BDO Unibank and Ayala Corp
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BDO and Ayala is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank ADR and Ayala Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala Corp ADR 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 ADR are associated (or correlated) with Ayala Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala Corp ADR has no effect on the direction of BDO Unibank i.e., BDO Unibank and Ayala Corp go up and down completely randomly.
Pair Corralation between BDO Unibank and Ayala Corp
Assuming the 90 days horizon BDO Unibank ADR is expected to generate 0.54 times more return on investment than Ayala Corp. However, BDO Unibank ADR is 1.84 times less risky than Ayala Corp. It trades about 0.04 of its potential returns per unit of risk. Ayala Corp ADR is currently generating about 0.02 per unit of risk. If you would invest 1,784 in BDO Unibank ADR on August 30, 2024 and sell it today you would earn a total of 851.00 from holding BDO Unibank ADR or generate 47.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.13% |
| Values | Daily Returns |
BDO Unibank ADR vs. Ayala Corp ADR
Performance |
| Timeline |
| BDO Unibank ADR |
| Ayala Corp ADR |
BDO Unibank and Ayala Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BDO Unibank and Ayala Corp
The main advantage of trading using opposite BDO Unibank and Ayala Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BDO Unibank position performs unexpectedly, Ayala Corp 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 Corp will offset losses from the drop in Ayala Corp's long position.| BDO Unibank vs. Swedbank AB | BDO Unibank vs. United Overseas Bank | BDO Unibank vs. KBC Groep NV | BDO Unibank vs. Jyske Bank AS |
| Ayala Corp vs. Honeywell International | Ayala Corp vs. 3M Company | Ayala Corp vs. Mitsubishi Corp | Ayala Corp vs. Hitachi |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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