Correlation Between THE PHILIPPINE and BDO Unibank
Can any of the company-specific risk be diversified away by investing in both THE PHILIPPINE and BDO Unibank 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 THE PHILIPPINE and BDO Unibank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THE PHILIPPINE STOCK and BDO Unibank, you can compare the effects of market volatilities on THE PHILIPPINE and BDO Unibank 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 THE PHILIPPINE with a short position of BDO Unibank. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE PHILIPPINE and BDO Unibank.
Diversification Opportunities for THE PHILIPPINE and BDO Unibank
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between THE and BDO is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding THE PHILIPPINE STOCK and BDO Unibank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDO Unibank and THE PHILIPPINE 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 THE PHILIPPINE STOCK are associated (or correlated) with BDO Unibank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BDO Unibank has no effect on the direction of THE PHILIPPINE i.e., THE PHILIPPINE and BDO Unibank go up and down completely randomly.
Pair Corralation between THE PHILIPPINE and BDO Unibank
Assuming the 90 days trading horizon THE PHILIPPINE STOCK is expected to under-perform the BDO Unibank. But the index apears to be less risky and, when comparing its historical volatility, THE PHILIPPINE STOCK is 1.69 times less risky than BDO Unibank. The index trades about -0.26 of its potential returns per unit of risk. The BDO Unibank is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 15,280 in BDO Unibank on September 1, 2024 and sell it today you would earn a total of 170.00 from holding BDO Unibank or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
THE PHILIPPINE STOCK vs. BDO Unibank
Performance |
| Timeline |
THE PHILIPPINE and BDO Unibank Volatility Contrast
Predicted Return Density |
| Returns |
THE PHILIPPINE STOCK
Pair trading matchups for THE PHILIPPINE
BDO Unibank
Pair trading matchups for BDO Unibank
Pair Trading with THE PHILIPPINE and BDO Unibank
The main advantage of trading using opposite THE PHILIPPINE and BDO Unibank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THE PHILIPPINE position performs unexpectedly, BDO Unibank 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 BDO Unibank will offset losses from the drop in BDO Unibank's long position.| THE PHILIPPINE vs. Apex Mining Co | THE PHILIPPINE vs. Lepanto Consolidated Mining | THE PHILIPPINE vs. Premiere Entertainment | THE PHILIPPINE vs. Jollibee Foods Corp |
| BDO Unibank vs. Sun Life Financial | BDO Unibank vs. Rizal Commercial Banking | BDO Unibank vs. Cebu Air Preferred | BDO Unibank 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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