Correlation Between Aboitiz Equity and Bank of the

Can any of the company-specific risk be diversified away by investing in both Aboitiz Equity and Bank of the 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 Aboitiz Equity and Bank of the into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aboitiz Equity Ventures and Bank of the, you can compare the effects of market volatilities on Aboitiz Equity and Bank of the 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 Aboitiz Equity with a short position of Bank of the. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aboitiz Equity and Bank of the.

Diversification Opportunities for Aboitiz Equity and Bank of the

-0.31

Correlation Coefficient

Aboitiz Equity  Bank of the

Very good diversification

The 3 months correlation between Aboitiz and Bank is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aboitiz Equity Ventures and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the and Aboitiz Equity 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 Aboitiz Equity Ventures are associated (or correlated) with Bank of the. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the has no effect on the direction of Aboitiz Equity i.e., Aboitiz Equity and Bank of the go up and down completely randomly.

Pair Corralation between Aboitiz Equity and Bank of the

Assuming the 90 days trading horizon Aboitiz Equity Ventures is expected to under-perform the Bank of the. But the stock apears to be less risky and, when comparing its historical volatility, Aboitiz Equity Ventures is 1.07 times less risky than Bank of the. The stock trades about -0.03 of its potential returns per unit of risk. The Bank of the is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  12,200  in Bank of the on December 27, 2024 and sell it today you would earn a total of  1,250  from holding Bank of the or generate 10.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aboitiz Equity Ventures  vs.  Bank of the

Aboitiz Equity Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aboitiz Equity Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Aboitiz Equity is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bank of the

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of the are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Bank of the may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aboitiz Equity and Bank of the

The main advantage of trading using opposite Aboitiz Equity and Bank of the positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aboitiz Equity position performs unexpectedly, Bank of the 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 Bank of the will offset losses from the drop in Bank of the's long position.

The idea behind Aboitiz Equity Ventures and Bank of the pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.