Correlation Between House Of and BDO Unibank

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

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

Diversification Opportunities for House Of and BDO Unibank

-0.01

Correlation Coefficient

House Of  BDO Unibank

Good diversification

The 3 months correlation between House and BDO is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding House of Investments and BDO Unibank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDO Unibank and House Of 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 House of Investments are associated (or correlated) with BDO Unibank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BDO Unibank has no effect on the direction of House Of i.e., House Of and BDO Unibank go up and down completely randomly.

Pair Corralation between House Of and BDO Unibank

Assuming the 90 days trading horizon House Of is expected to generate 1.1 times less return on investment than BDO Unibank. In addition to that, House Of is 2.47 times more volatile than BDO Unibank. It trades about 0.01 of its total potential returns per unit of risk. BDO Unibank is currently generating about 0.04 per unit of volatility. If you would invest  11,677  in BDO Unibank on October 12, 2024 and sell it today you would earn a total of  3,073  from holding BDO Unibank or generate 26.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	43.13%
Values	Daily Returns

House of Investments  vs.  BDO Unibank

House of Investments

Risk-Adjusted Performance

0 of 100

Weak

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

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 rather sound technical and fundamental indicators, BDO Unibank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with House Of and BDO Unibank

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

The idea behind House of Investments and BDO Unibank 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 Stocks Directory module to find actively traded stocks across global markets.