Correlation Between Security Bank and Rizal Commercial

Can any of the company-specific risk be diversified away by investing in both Security Bank 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 Security Bank and Rizal Commercial 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 Rizal Commercial Banking, you can compare the effects of market volatilities on Security Bank 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 Security Bank with a short position of Rizal Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Bank and Rizal Commercial.

Diversification Opportunities for Security Bank and Rizal Commercial

-0.42

Correlation Coefficient

Security Bank  Rizal Commercial

Very good diversification

The 3 months correlation between Security and Rizal is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Security Bank 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 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 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 Security Bank i.e., Security Bank and Rizal Commercial go up and down completely randomly.

Pair Corralation between Security Bank and Rizal Commercial

Assuming the 90 days trading horizon Security Bank Corp is expected to under-perform the Rizal Commercial. But the stock apears to be less risky and, when comparing its historical volatility, Security Bank Corp is 1.16 times less risky than Rizal Commercial. The stock trades about -0.14 of its potential returns per unit of risk. The Rizal Commercial Banking is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,445  in Rizal Commercial Banking on December 3, 2024 and sell it today you would earn a total of  140.00  from holding Rizal Commercial Banking or generate 5.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.61%
Values	Daily Returns

Security Bank Corp  vs.  Rizal Commercial Banking

Security Bank Corp

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Rizal Commercial Banking

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rizal Commercial Banking are ranked lower than 4 (%) 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.

Pair Trading with Security Bank and Rizal Commercial

The main advantage of trading using opposite Security Bank and Rizal Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security Bank 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 Security Bank 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.