Correlation Between BDO Unibank and Del Monte

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

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

Diversification Opportunities for BDO Unibank and Del Monte

0.03

Correlation Coefficient

BDO Unibank  Del Monte

Significant diversification

The 3 months correlation between BDO and Del is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and Del Monte Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Del Monte Pacific 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 Del Monte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Del Monte Pacific has no effect on the direction of BDO Unibank i.e., BDO Unibank and Del Monte go up and down completely randomly.

Pair Corralation between BDO Unibank and Del Monte

Assuming the 90 days trading horizon BDO Unibank is expected to generate 0.65 times more return on investment than Del Monte. However, BDO Unibank is 1.54 times less risky than Del Monte. It trades about -0.09 of its potential returns per unit of risk. Del Monte Pacific is currently generating about -0.11 per unit of risk. If you would invest  15,895  in BDO Unibank on September 26, 2024 and sell it today you would lose (1,385) from holding BDO Unibank or give up 8.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	73.17%
Values	Daily Returns

BDO Unibank  vs.  Del Monte Pacific

BDO Unibank

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Del Monte Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Del Monte Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BDO Unibank and Del Monte

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

The idea behind BDO Unibank and Del Monte Pacific 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.