Correlation Between LFM Properties and Rizal Commercial

Can any of the company-specific risk be diversified away by investing in both LFM Properties and Rizal Commercial 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 LFM Properties and Rizal Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LFM Properties Corp and Rizal Commercial Banking, you can compare the effects of market volatilities on LFM Properties and Rizal Commercial 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 LFM Properties with a short position of Rizal Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LFM Properties and Rizal Commercial.

Diversification Opportunities for LFM Properties and Rizal Commercial

-0.17

Correlation Coefficient

LFM Properties  Rizal Commercial

Good diversification

The 3 months correlation between LFM and Rizal is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding LFM Properties Corp and Rizal Commercial Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rizal Commercial Banking and LFM Properties 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 LFM Properties Corp are associated (or correlated) with Rizal Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rizal Commercial Banking has no effect on the direction of LFM Properties i.e., LFM Properties and Rizal Commercial go up and down completely randomly.

Pair Corralation between LFM Properties and Rizal Commercial

Assuming the 90 days trading horizon LFM Properties Corp is expected to under-perform the Rizal Commercial. In addition to that, LFM Properties is 3.54 times more volatile than Rizal Commercial Banking. It trades about -0.03 of its total potential returns per unit of risk. Rizal Commercial Banking is currently generating about 0.07 per unit of volatility. If you would invest  2,135  in Rizal Commercial Banking on September 3, 2024 and sell it today you would earn a total of  185.00  from holding Rizal Commercial Banking or generate 8.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.21%
Values	Daily Returns

LFM Properties Corp  vs.  Rizal Commercial Banking

LFM Properties Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LFM Properties Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Rizal Commercial Banking

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with LFM Properties and Rizal Commercial

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

The idea behind LFM Properties Corp and Rizal Commercial Banking 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..