Correlation Between Robinsons Retail and Philippine Business

Can any of the company-specific risk be diversified away by investing in both Robinsons Retail and Philippine Business 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 Robinsons Retail and Philippine Business into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Robinsons Retail Holdings and Philippine Business Bank, you can compare the effects of market volatilities on Robinsons Retail and Philippine Business 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 Robinsons Retail with a short position of Philippine Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Robinsons Retail and Philippine Business.

Diversification Opportunities for Robinsons Retail and Philippine Business

-0.84

Correlation Coefficient

Robinsons Retail  Philippine Business

Pay attention - limited upside

The 3 months correlation between Robinsons and Philippine is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Robinsons Retail Holdings and Philippine Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philippine Business Bank and Robinsons Retail 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 Robinsons Retail Holdings are associated (or correlated) with Philippine Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philippine Business Bank has no effect on the direction of Robinsons Retail i.e., Robinsons Retail and Philippine Business go up and down completely randomly.

Pair Corralation between Robinsons Retail and Philippine Business

Assuming the 90 days trading horizon Robinsons Retail Holdings is expected to under-perform the Philippine Business. But the stock apears to be less risky and, when comparing its historical volatility, Robinsons Retail Holdings is 1.13 times less risky than Philippine Business. The stock trades about -0.11 of its potential returns per unit of risk. The Philippine Business Bank is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  790.00  in Philippine Business Bank on September 18, 2024 and sell it today you would earn a total of  150.00  from holding Philippine Business Bank or generate 18.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	93.65%
Values	Daily Returns

Robinsons Retail Holdings  vs.  Philippine Business Bank

Robinsons Retail Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Robinsons Retail Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Philippine Business Bank

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Philippine Business Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Philippine Business exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Robinsons Retail and Philippine Business

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

The idea behind Robinsons Retail Holdings and Philippine Business Bank 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 Stocks Directory module to find actively traded stocks across global markets.