Correlation Between Philippine Business and Oriental Petroleum
Can any of the company-specific risk be diversified away by investing in both Philippine Business and Oriental Petroleum 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 Philippine Business and Oriental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philippine Business Bank and Oriental Petroleum and, you can compare the effects of market volatilities on Philippine Business and Oriental Petroleum 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 Philippine Business with a short position of Oriental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Business and Oriental Petroleum.
Diversification Opportunities for Philippine Business and Oriental Petroleum
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Philippine and Oriental is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Business Bank and Oriental Petroleum and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Petroleum and and Philippine Business 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 Philippine Business Bank are associated (or correlated) with Oriental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Petroleum and has no effect on the direction of Philippine Business i.e., Philippine Business and Oriental Petroleum go up and down completely randomly.
Pair Corralation between Philippine Business and Oriental Petroleum
Assuming the 90 days trading horizon Philippine Business Bank is expected to generate 0.36 times more return on investment than Oriental Petroleum. However, Philippine Business Bank is 2.76 times less risky than Oriental Petroleum. It trades about 0.08 of its potential returns per unit of risk. Oriental Petroleum and is currently generating about -0.35 per unit of risk. If you would invest 930.00 in Philippine Business Bank on September 12, 2024 and sell it today you would earn a total of 20.00 from holding Philippine Business Bank or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 68.18% |
| Values | Daily Returns |
Philippine Business Bank vs. Oriental Petroleum and
Performance |
| Timeline |
| Philippine Business Bank |
| Oriental Petroleum and |
Philippine Business and Oriental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Business and Oriental Petroleum
The main advantage of trading using opposite Philippine Business and Oriental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Business position performs unexpectedly, Oriental Petroleum 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 Oriental Petroleum will offset losses from the drop in Oriental Petroleum's long position.| Philippine Business vs. BDO Unibank | Philippine Business vs. Metropolitan Bank Trust | Philippine Business vs. Security Bank Corp | Philippine Business vs. Union Bank of |
| Oriental Petroleum vs. Rizal Commercial Banking | Oriental Petroleum vs. National Reinsurance | Oriental Petroleum vs. Transpacific Broadband Group | Oriental Petroleum vs. Atlas Consolidated Mining |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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