Correlation Between Rizal Commercial and Robinsons Retail

Can any of the company-specific risk be diversified away by investing in both Rizal Commercial and Robinsons Retail 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 Robinsons Retail 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 Robinsons Retail Holdings, you can compare the effects of market volatilities on Rizal Commercial and Robinsons Retail 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 Robinsons Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rizal Commercial and Robinsons Retail.

Diversification Opportunities for Rizal Commercial and Robinsons Retail

0.77

Correlation Coefficient

Rizal Commercial  Robinsons Retail

Poor diversification

The 3 months correlation between Rizal and Robinsons is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rizal Commercial Banking and Robinsons Retail Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robinsons Retail Holdings 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 Robinsons Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robinsons Retail Holdings has no effect on the direction of Rizal Commercial i.e., Rizal Commercial and Robinsons Retail go up and down completely randomly.

Pair Corralation between Rizal Commercial and Robinsons Retail

Assuming the 90 days trading horizon Rizal Commercial Banking is expected to generate 2.06 times more return on investment than Robinsons Retail. However, Rizal Commercial is 2.06 times more volatile than Robinsons Retail Holdings. It trades about 0.05 of its potential returns per unit of risk. Robinsons Retail Holdings is currently generating about 0.01 per unit of risk. If you would invest  2,440  in Rizal Commercial Banking on September 23, 2024 and sell it today you would earn a total of  55.00  from holding Rizal Commercial Banking or generate 2.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

Rizal Commercial Banking  vs.  Robinsons Retail Holdings

Rizal Commercial Banking

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rizal Commercial Banking 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.

Robinsons Retail Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Robinsons Retail Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 Rizal Commercial and Robinsons Retail

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

The idea behind Rizal Commercial Banking and Robinsons Retail Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.