Correlation Between National Reinsurance and Rizal Commercial
Can any of the company-specific risk be diversified away by investing in both National Reinsurance and Rizal Commercial 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 National Reinsurance and Rizal Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Reinsurance and Rizal Commercial Banking, you can compare the effects of market volatilities on National Reinsurance and Rizal Commercial 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 National Reinsurance with a short position of Rizal Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Reinsurance and Rizal Commercial.
Diversification Opportunities for National Reinsurance and Rizal Commercial
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Rizal is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding National Reinsurance and Rizal Commercial Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rizal Commercial Banking and National Reinsurance 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 National Reinsurance are associated (or correlated) with Rizal Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rizal Commercial Banking has no effect on the direction of National Reinsurance i.e., National Reinsurance and Rizal Commercial go up and down completely randomly.
Pair Corralation between National Reinsurance and Rizal Commercial
Assuming the 90 days trading horizon National Reinsurance is expected to generate 3.62 times more return on investment than Rizal Commercial. However, National Reinsurance is 3.62 times more volatile than Rizal Commercial Banking. It trades about 0.04 of its potential returns per unit of risk. Rizal Commercial Banking is currently generating about 0.03 per unit of risk. If you would invest 56.00 in National Reinsurance on September 14, 2024 and sell it today you would earn a total of 12.00 from holding National Reinsurance or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 64.27% |
| Values | Daily Returns |
National Reinsurance vs. Rizal Commercial Banking
Performance |
| Timeline |
| National Reinsurance |
| Rizal Commercial Banking |
National Reinsurance and Rizal Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Reinsurance and Rizal Commercial
The main advantage of trading using opposite National Reinsurance and Rizal Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Reinsurance position performs unexpectedly, Rizal Commercial 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 Rizal Commercial will offset losses from the drop in Rizal Commercial's long position.| National Reinsurance vs. GT Capital Holdings | National Reinsurance vs. Allhome Corp | National Reinsurance vs. Jollibee Foods Corp | National Reinsurance vs. LFM Properties Corp |
| Rizal Commercial vs. Concepcion Industrial Corp | Rizal Commercial vs. Converge Information Communications | Rizal Commercial vs. Atlas Consolidated Mining | Rizal Commercial vs. Philippine Business Bank |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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