Correlation Between BDO Unibank and Globe Telecom

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

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

Diversification Opportunities for BDO Unibank and Globe Telecom

-0.41

Correlation Coefficient

BDO Unibank  Globe Telecom

Very good diversification

The 3 months correlation between BDO and Globe is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and Globe Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Telecom 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 Globe Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Telecom has no effect on the direction of BDO Unibank i.e., BDO Unibank and Globe Telecom go up and down completely randomly.

Pair Corralation between BDO Unibank and Globe Telecom

Assuming the 90 days trading horizon BDO Unibank is expected to generate 1.63 times more return on investment than Globe Telecom. However, BDO Unibank is 1.63 times more volatile than Globe Telecom. It trades about 0.06 of its potential returns per unit of risk. Globe Telecom is currently generating about 0.07 per unit of risk. If you would invest  14,358  in BDO Unibank on December 29, 2024 and sell it today you would earn a total of  1,042  from holding BDO Unibank or generate 7.26% return on investment over 90 days.

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

BDO Unibank  vs.  Globe Telecom

BDO Unibank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BDO Unibank are ranked lower than 4 (%) 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.

Globe Telecom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Telecom are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Globe Telecom 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 Globe Telecom

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

The idea behind BDO Unibank and Globe Telecom 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.