Correlation Between COL Financial and Berjaya Philippines

Can any of the company-specific risk be diversified away by investing in both COL Financial and Berjaya Philippines 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 COL Financial and Berjaya Philippines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COL Financial Group and Berjaya Philippines, you can compare the effects of market volatilities on COL Financial and Berjaya Philippines 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 COL Financial with a short position of Berjaya Philippines. Check out your portfolio center. Please also check ongoing floating volatility patterns of COL Financial and Berjaya Philippines.

Diversification Opportunities for COL Financial and Berjaya Philippines

-0.3

Correlation Coefficient

COL Financial  Berjaya Philippines

Very good diversification

The 3 months correlation between COL and Berjaya is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding COL Financial Group and Berjaya Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berjaya Philippines and COL Financial 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 COL Financial Group are associated (or correlated) with Berjaya Philippines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berjaya Philippines has no effect on the direction of COL Financial i.e., COL Financial and Berjaya Philippines go up and down completely randomly.

Pair Corralation between COL Financial and Berjaya Philippines

Assuming the 90 days trading horizon COL Financial Group is expected to under-perform the Berjaya Philippines. But the stock apears to be less risky and, when comparing its historical volatility, COL Financial Group is 2.78 times less risky than Berjaya Philippines. The stock trades about -0.04 of its potential returns per unit of risk. The Berjaya Philippines is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  790.00  in Berjaya Philippines on September 29, 2024 and sell it today you would earn a total of  190.00  from holding Berjaya Philippines or generate 24.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.15%
Values	Daily Returns

COL Financial Group  vs.  Berjaya Philippines

COL Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COL Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, COL Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Berjaya Philippines

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berjaya Philippines are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Berjaya Philippines unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COL Financial and Berjaya Philippines

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

The idea behind COL Financial Group and Berjaya 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.