Correlation Between Rizal Commercial and Philex Mining

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

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

Diversification Opportunities for Rizal Commercial and Philex Mining

0.85

Correlation Coefficient

Rizal Commercial  Philex Mining

Very poor diversification

The 3 months correlation between Rizal and Philex is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Rizal Commercial Banking and Philex Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philex Mining Corp and Rizal Commercial 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 Rizal Commercial Banking are associated (or correlated) with Philex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philex Mining Corp has no effect on the direction of Rizal Commercial i.e., Rizal Commercial and Philex Mining go up and down completely randomly.

Pair Corralation between Rizal Commercial and Philex Mining

Assuming the 90 days trading horizon Rizal Commercial is expected to generate 9.47 times less return on investment than Philex Mining. But when comparing it to its historical volatility, Rizal Commercial Banking is 2.32 times less risky than Philex Mining. It trades about 0.09 of its potential returns per unit of risk. Philex Mining Corp is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  278.00  in Philex Mining Corp on December 30, 2024 and sell it today you would earn a total of  442.00  from holding Philex Mining Corp or generate 158.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Rizal Commercial Banking  vs.  Philex Mining Corp

Rizal Commercial Banking

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rizal Commercial Banking are ranked lower than 6 (%) 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 April 2025.

Philex Mining Corp

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Philex Mining Corp are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Philex Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rizal Commercial and Philex Mining

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

The idea behind Rizal Commercial Banking and Philex Mining 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.