Correlation Between Philippine Business and Security Bank
Can any of the company-specific risk be diversified away by investing in both Philippine Business and Security Bank 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 Security Bank 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 Security Bank Corp, you can compare the effects of market volatilities on Philippine Business and Security Bank 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 Security Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Business and Security Bank.
Diversification Opportunities for Philippine Business and Security Bank
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Philippine and Security is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Business Bank and Security Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Bank Corp 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 Security Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Bank Corp has no effect on the direction of Philippine Business i.e., Philippine Business and Security Bank go up and down completely randomly.
Pair Corralation between Philippine Business and Security Bank
Assuming the 90 days trading horizon Philippine Business Bank is expected to generate 0.4 times more return on investment than Security Bank. However, Philippine Business Bank is 2.47 times less risky than Security Bank. It trades about 0.11 of its potential returns per unit of risk. Security Bank Corp is currently generating about -0.11 per unit of risk. If you would invest 910.00 in Philippine Business Bank on August 29, 2024 and sell it today you would earn a total of 20.00 from holding Philippine Business Bank or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Philippine Business Bank vs. Security Bank Corp
Performance |
| Timeline |
| Philippine Business Bank |
| Security Bank Corp |
Philippine Business and Security Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Business and Security Bank
The main advantage of trading using opposite Philippine Business and Security Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Business position performs unexpectedly, Security Bank 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 Security Bank will offset losses from the drop in Security Bank's long position.| Philippine Business vs. Apex Mining Co | Philippine Business vs. Pacificonline Systems | Philippine Business vs. SM Investments Corp | Philippine Business vs. Manila Mining 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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