Correlation Between Rizal Commercial and Cirtek Holdings

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

Diversification Opportunities for Rizal Commercial and Cirtek Holdings

0.0

Correlation Coefficient

Rizal Commercial  Cirtek Holdings

Pay attention - limited upside

The 3 months correlation between Rizal and Cirtek is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rizal Commercial Banking and Cirtek Holdings Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirtek Holdings Phil 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 Cirtek Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirtek Holdings Phil has no effect on the direction of Rizal Commercial i.e., Rizal Commercial and Cirtek Holdings go up and down completely randomly.

Pair Corralation between Rizal Commercial and Cirtek Holdings

Assuming the 90 days trading horizon Rizal Commercial Banking is expected to under-perform the Cirtek Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Rizal Commercial Banking is 1.57 times less risky than Cirtek Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The Cirtek Holdings Philippines is currently generating about 0.86 of returns per unit of risk over similar time horizon. If you would invest  56.00  in Cirtek Holdings Philippines on October 26, 2024 and sell it today you would earn a total of  9.00  from holding Cirtek Holdings Philippines or generate 16.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	25.0%
Values	Daily Returns

Rizal Commercial Banking  vs.  Cirtek Holdings Philippines

Rizal Commercial Banking

Risk-Adjusted Performance

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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 uncertain 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.

Cirtek Holdings Phil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cirtek Holdings Philippines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Cirtek Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Rizal Commercial and Cirtek Holdings

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

The idea behind Rizal Commercial Banking and Cirtek Holdings Philippines 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.