Correlation Between Security Bank and Cirtek Holdings

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

Diversification Opportunities for Security Bank and Cirtek Holdings

0.57

Correlation Coefficient

Security Bank  Cirtek Holdings

Very weak diversification

The 3 months correlation between Security and Cirtek is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Security Bank Corp 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 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 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 Security Bank i.e., Security Bank and Cirtek Holdings go up and down completely randomly.

Pair Corralation between Security Bank and Cirtek Holdings

Assuming the 90 days trading horizon Security Bank Corp is expected to generate 0.3 times more return on investment than Cirtek Holdings. However, Security Bank Corp is 3.34 times less risky than Cirtek Holdings. It trades about -0.02 of its potential returns per unit of risk. Cirtek Holdings Philippines is currently generating about -0.68 per unit of risk. If you would invest  8,900  in Security Bank Corp on September 26, 2024 and sell it today you would lose (100.00) from holding Security Bank Corp or give up 1.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	22.73%
Values	Daily Returns

Security Bank Corp  vs.  Cirtek Holdings Philippines

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 comparatively stable basic indicators, Security Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 latest unsteady performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Security Bank and Cirtek Holdings

The main advantage of trading using opposite Security Bank and Cirtek Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security Bank 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 Security Bank Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.