Correlation Between Security Bank and AllDay Marts
Can any of the company-specific risk be diversified away by investing in both Security Bank and AllDay Marts 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 Security Bank and AllDay Marts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Security Bank Corp and AllDay Marts, you can compare the effects of market volatilities on Security Bank and AllDay Marts 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 Security Bank with a short position of AllDay Marts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Bank and AllDay Marts.
Diversification Opportunities for Security Bank and AllDay Marts
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Security and AllDay is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Security Bank Corp and AllDay Marts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllDay Marts and Security Bank 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 Security Bank Corp are associated (or correlated) with AllDay Marts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllDay Marts has no effect on the direction of Security Bank i.e., Security Bank and AllDay Marts go up and down completely randomly.
Pair Corralation between Security Bank and AllDay Marts
Assuming the 90 days trading horizon Security Bank Corp is expected to generate 0.84 times more return on investment than AllDay Marts. However, Security Bank Corp is 1.19 times less risky than AllDay Marts. It trades about 0.09 of its potential returns per unit of risk. AllDay Marts is currently generating about 0.01 per unit of risk. If you would invest 6,927 in Security Bank Corp on September 1, 2024 and sell it today you would earn a total of 1,753 from holding Security Bank Corp or generate 25.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Security Bank Corp vs. AllDay Marts
Performance |
| Timeline |
| Security Bank Corp |
| AllDay Marts |
Security Bank and AllDay Marts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Security Bank and AllDay Marts
The main advantage of trading using opposite Security Bank and AllDay Marts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security Bank position performs unexpectedly, AllDay Marts 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 AllDay Marts will offset losses from the drop in AllDay Marts' long position.| Security Bank vs. Metropolitan Bank Trust | Security Bank vs. Philippine National Bank | Security Bank vs. Asia United Bank | Security Bank vs. Philippine Savings Bank |
| AllDay Marts vs. Atlas Consolidated Mining | AllDay Marts vs. Manila Mining Corp | AllDay Marts vs. Metro Retail Stores | AllDay Marts vs. Philex 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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