Correlation Between Security Bank and Benguet Corp

Can any of the company-specific risk be diversified away by investing in both Security Bank and Benguet Corp 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 Security Bank and Benguet Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Security Bank Corp and Benguet Corp A, you can compare the effects of market volatilities on Security Bank and Benguet Corp 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 Security Bank with a short position of Benguet Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Bank and Benguet Corp.

Diversification Opportunities for Security Bank and Benguet Corp

0.25

Correlation Coefficient

Security Bank  Benguet Corp

Modest diversification

The 3 months correlation between Security and Benguet is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Security Bank Corp and Benguet Corp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benguet Corp A and Security Bank 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 Security Bank Corp are associated (or correlated) with Benguet Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benguet Corp A has no effect on the direction of Security Bank i.e., Security Bank and Benguet Corp go up and down completely randomly.

Pair Corralation between Security Bank and Benguet Corp

Assuming the 90 days trading horizon Security Bank Corp is expected to under-perform the Benguet Corp. But the stock apears to be less risky and, when comparing its historical volatility, Security Bank Corp is 1.68 times less risky than Benguet Corp. The stock trades about 0.0 of its potential returns per unit of risk. The Benguet Corp A is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  484.00  in Benguet Corp A on October 23, 2024 and sell it today you would lose (75.00) from holding Benguet Corp A or give up 15.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.68%
Values	Daily Returns

Security Bank Corp  vs.  Benguet Corp A

Security Bank Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Security Bank 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Benguet Corp A

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Benguet Corp A are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Benguet Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Security Bank and Benguet Corp

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

The idea behind Security Bank Corp and Benguet Corp A 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.