Correlation Between Rizal Commercial and Cirtek Holdings

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

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

Diversification Opportunities for Rizal Commercial and Cirtek Holdings

0.0

Correlation Coefficient

Rizal Commercial  Cirtek Holdings

Pay attention - limited upside

The 3 months correlation between Rizal and Cirtek is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rizal Commercial Banking 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 Rizal Commercial 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 Rizal Commercial Banking 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 Rizal Commercial i.e., Rizal Commercial and Cirtek Holdings go up and down completely randomly.

Pair Corralation between Rizal Commercial and Cirtek Holdings

Assuming the 90 days trading horizon Rizal Commercial is expected to generate 1.11 times less return on investment than Cirtek Holdings. In addition to that, Rizal Commercial is 1.95 times more volatile than Cirtek Holdings Philippines. It trades about 0.03 of its total potential returns per unit of risk. Cirtek Holdings Philippines is currently generating about 0.06 per unit of volatility. If you would invest  4,750  in Cirtek Holdings Philippines on September 14, 2024 and sell it today you would earn a total of  150.00  from holding Cirtek Holdings Philippines or generate 3.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	81.97%
Values	Daily Returns

Rizal Commercial Banking  vs.  Cirtek Holdings Philippines

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.

Cirtek Holdings Phil

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cirtek Holdings Philippines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, Cirtek Holdings is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Rizal Commercial and Cirtek Holdings

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

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.