Correlation Between BDO Unibank and Asia United

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

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

Diversification Opportunities for BDO Unibank and Asia United

0.06

Correlation Coefficient

BDO Unibank  Asia United

Significant diversification

The 3 months correlation between BDO and Asia is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and Asia United Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia United Bank and BDO Unibank 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 BDO Unibank are associated (or correlated) with Asia United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia United Bank has no effect on the direction of BDO Unibank i.e., BDO Unibank and Asia United go up and down completely randomly.

Pair Corralation between BDO Unibank and Asia United

Assuming the 90 days trading horizon BDO Unibank is expected to generate 1.39 times less return on investment than Asia United. In addition to that, BDO Unibank is 1.02 times more volatile than Asia United Bank. It trades about 0.06 of its total potential returns per unit of risk. Asia United Bank is currently generating about 0.09 per unit of volatility. If you would invest  6,300  in Asia United Bank on December 28, 2024 and sell it today you would earn a total of  685.00  from holding Asia United Bank or generate 10.87% return on investment over 90 days.

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

BDO Unibank  vs.  Asia United Bank

BDO Unibank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BDO Unibank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, BDO Unibank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Asia United Bank

Risk-Adjusted Performance

OK

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

Pair Trading with BDO Unibank and Asia United

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

The idea behind BDO Unibank and Asia United Bank 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.