Correlation Between COL Financial and Philippine Business

Can any of the company-specific risk be diversified away by investing in both COL Financial 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 COL Financial and Philippine Business 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 Philippine Business Bank, you can compare the effects of market volatilities on COL Financial 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 COL Financial with a short position of Philippine Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of COL Financial and Philippine Business.

Diversification Opportunities for COL Financial and Philippine Business

-0.55

Correlation Coefficient

COL Financial  Philippine Business

Excellent diversification

The 3 months correlation between COL and Philippine is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding COL Financial Group 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 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 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 COL Financial i.e., COL Financial and Philippine Business go up and down completely randomly.

Pair Corralation between COL Financial and Philippine Business

Assuming the 90 days trading horizon COL Financial Group is expected to under-perform the Philippine Business. But the stock apears to be less risky and, when comparing its historical volatility, COL Financial Group is 1.74 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 0.09 of returns per unit of risk over similar time horizon. If you would invest  845.00  in Philippine Business Bank on April 16, 2025 and sell it today you would earn a total of  35.00  from holding Philippine Business Bank or generate 4.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

COL Financial Group  vs.  Philippine Business Bank

COL Financial Group

Risk-Adjusted Performance

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 latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Philippine Business Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Philippine Business Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Philippine Business may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with COL Financial and Philippine Business

The main advantage of trading using opposite COL Financial and Philippine Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COL Financial 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 COL Financial Group 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.