Correlation Between Rizal Commercial and National Reinsurance
Can any of the company-specific risk be diversified away by investing in both Rizal Commercial and National Reinsurance 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 Rizal Commercial and National Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rizal Commercial Banking and National Reinsurance, you can compare the effects of market volatilities on Rizal Commercial and National Reinsurance 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 Rizal Commercial with a short position of National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rizal Commercial and National Reinsurance.
Diversification Opportunities for Rizal Commercial and National Reinsurance
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rizal and National is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Rizal Commercial Banking and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance and Rizal Commercial 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 Rizal Commercial Banking are associated (or correlated) with National Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Reinsurance has no effect on the direction of Rizal Commercial i.e., Rizal Commercial and National Reinsurance go up and down completely randomly.
Pair Corralation between Rizal Commercial and National Reinsurance
Assuming the 90 days trading horizon Rizal Commercial is expected to generate 11.15 times less return on investment than National Reinsurance. But when comparing it to its historical volatility, Rizal Commercial Banking is 3.35 times less risky than National Reinsurance. It trades about 0.02 of its potential returns per unit of risk. National Reinsurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 40.00 in National Reinsurance on September 15, 2024 and sell it today you would earn a total of 30.00 from holding National Reinsurance or generate 75.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.42% |
| Values | Daily Returns |
Rizal Commercial Banking vs. National Reinsurance
Performance |
| Timeline |
| Rizal Commercial Banking |
| National Reinsurance |
Rizal Commercial and National Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rizal Commercial and National Reinsurance
The main advantage of trading using opposite Rizal Commercial and National Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rizal Commercial position performs unexpectedly, National Reinsurance 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 National Reinsurance will offset losses from the drop in National Reinsurance's long position.| Rizal Commercial vs. Dizon Copper Silver | Rizal Commercial vs. GT Capital Holdings | Rizal Commercial vs. Allhome Corp | Rizal Commercial vs. Jollibee Foods Corp |
| National Reinsurance vs. Atlas Consolidated Mining | National Reinsurance vs. Philex Mining Corp | National Reinsurance vs. East West Banking | National Reinsurance vs. Apex Mining Co |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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