Correlation Between BDO Unibank and Concepcion Industrial

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

By analyzing existing cross correlation between BDO Unibank and Concepcion Industrial Corp, you can compare the effects of market volatilities on BDO Unibank and Concepcion Industrial 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 Concepcion Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and Concepcion Industrial.

Diversification Opportunities for BDO Unibank and Concepcion Industrial

-0.31

Correlation Coefficient

BDO Unibank  Concepcion Industrial

Very good diversification

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

Pair Corralation between BDO Unibank and Concepcion Industrial

Assuming the 90 days trading horizon BDO Unibank is expected to generate 0.64 times more return on investment than Concepcion Industrial. However, BDO Unibank is 1.57 times less risky than Concepcion Industrial. It trades about 0.04 of its potential returns per unit of risk. Concepcion Industrial Corp is currently generating about 0.02 per unit of risk. If you would invest  11,919  in BDO Unibank on December 4, 2024 and sell it today you would earn a total of  3,181  from holding BDO Unibank or generate 26.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.88%
Values	Daily Returns

BDO Unibank  vs.  Concepcion Industrial Corp

BDO Unibank

Risk-Adjusted Performance

Very Weak

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

Concepcion Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Concepcion Industrial Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Concepcion Industrial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BDO Unibank and Concepcion Industrial

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

The idea behind BDO Unibank and Concepcion Industrial Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.