Correlation Between Globe Telecom and Rizal Commercial

Can any of the company-specific risk be diversified away by investing in both Globe Telecom 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 Globe Telecom and Rizal Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Globe Telecom and Rizal Commercial Banking, you can compare the effects of market volatilities on Globe Telecom 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 Globe Telecom with a short position of Rizal Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Telecom and Rizal Commercial.

Diversification Opportunities for Globe Telecom and Rizal Commercial

0.37

Correlation Coefficient

Globe Telecom  Rizal Commercial

Weak diversification

The 3 months correlation between Globe and Rizal is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Globe Telecom 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 Globe Telecom 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 Globe Telecom 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 Globe Telecom i.e., Globe Telecom and Rizal Commercial go up and down completely randomly.

Pair Corralation between Globe Telecom and Rizal Commercial

Assuming the 90 days trading horizon Globe Telecom is expected to under-perform the Rizal Commercial. But the stock apears to be less risky and, when comparing its historical volatility, Globe Telecom is 1.33 times less risky than Rizal Commercial. The stock trades about -0.03 of its potential returns per unit of risk. The Rizal Commercial Banking is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,445  in Rizal Commercial Banking on September 14, 2024 and sell it today you would earn a total of  50.00  from holding Rizal Commercial Banking or generate 2.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Globe Telecom  vs.  Rizal Commercial Banking

Globe Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rizal Commercial Banking

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rizal Commercial Banking are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Rizal Commercial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Globe Telecom and Rizal Commercial

The main advantage of trading using opposite Globe Telecom and Rizal Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Telecom 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 Globe Telecom 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.