Correlation Between BDO Unibank and GT Capital

Can any of the company-specific risk be diversified away by investing in both BDO Unibank and GT Capital 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 BDO Unibank and GT Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BDO Unibank and GT Capital Holdings, you can compare the effects of market volatilities on BDO Unibank and GT Capital 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 BDO Unibank with a short position of GT Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of BDO Unibank and GT Capital.

Diversification Opportunities for BDO Unibank and GT Capital

-0.57

Correlation Coefficient

BDO Unibank  GT Capital

Excellent diversification

The 3 months correlation between BDO and GTCAP is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding BDO Unibank and GT Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Capital Holdings and BDO Unibank 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 BDO Unibank are associated (or correlated) with GT Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Capital Holdings has no effect on the direction of BDO Unibank i.e., BDO Unibank and GT Capital go up and down completely randomly.

Pair Corralation between BDO Unibank and GT Capital

Assuming the 90 days trading horizon BDO Unibank is expected to under-perform the GT Capital. But the stock apears to be less risky and, when comparing its historical volatility, BDO Unibank is 1.58 times less risky than GT Capital. The stock trades about -0.05 of its potential returns per unit of risk. The GT Capital Holdings is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  48,000  in GT Capital Holdings on April 23, 2025 and sell it today you would earn a total of  17,000  from holding GT Capital Holdings or generate 35.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BDO Unibank  vs.  GT Capital Holdings

BDO Unibank

Risk-Adjusted Performance

Very Weak

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

GT Capital Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GT Capital Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, GT Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BDO Unibank and GT Capital

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

The idea behind BDO Unibank and GT Capital Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.