Correlation Between BDO Unibank and BOC Hong
Can any of the company-specific risk be diversified away by investing in both BDO Unibank and BOC Hong 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 BOC Hong 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 BOC Hong Kong, you can compare the effects of market volatilities on BDO Unibank and BOC Hong 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 BOC Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and BOC Hong.
Diversification Opportunities for BDO Unibank and BOC Hong
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BDO and BOC is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank ADR and BOC Hong Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOC Hong Kong 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 BOC Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOC Hong Kong has no effect on the direction of BDO Unibank i.e., BDO Unibank and BOC Hong go up and down completely randomly.
Pair Corralation between BDO Unibank and BOC Hong
Assuming the 90 days horizon BDO Unibank ADR is expected to generate 1.78 times more return on investment than BOC Hong. However, BDO Unibank is 1.78 times more volatile than BOC Hong Kong. It trades about 0.04 of its potential returns per unit of risk. BOC Hong Kong is currently generating about 0.04 per unit of risk. If you would invest 1,800 in BDO Unibank ADR on August 27, 2024 and sell it today you would earn a total of 732.00 from holding BDO Unibank ADR or generate 40.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BDO Unibank ADR vs. BOC Hong Kong
Performance |
| Timeline |
| BDO Unibank ADR |
| BOC Hong Kong |
BDO Unibank and BOC Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BDO Unibank and BOC Hong
The main advantage of trading using opposite BDO Unibank and BOC Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BDO Unibank position performs unexpectedly, BOC Hong 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 BOC Hong will offset losses from the drop in BOC Hong'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 |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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