Correlation Between Philippine Business and Atok Big

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

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

Diversification Opportunities for Philippine Business and Atok Big

-0.62

Correlation Coefficient

Philippine Business  Atok Big

Excellent diversification

The 3 months correlation between Philippine and Atok is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Business Bank and Atok Big Wedge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atok Big Wedge and Philippine Business 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 Philippine Business Bank are associated (or correlated) with Atok Big. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atok Big Wedge has no effect on the direction of Philippine Business i.e., Philippine Business and Atok Big go up and down completely randomly.

Pair Corralation between Philippine Business and Atok Big

Assuming the 90 days trading horizon Philippine Business is expected to generate 1.83 times less return on investment than Atok Big. But when comparing it to its historical volatility, Philippine Business Bank is 3.15 times less risky than Atok Big. It trades about 0.04 of its potential returns per unit of risk. Atok Big Wedge is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  584.00  in Atok Big Wedge on April 20, 2025 and sell it today you would lose (204.00) from holding Atok Big Wedge or give up 34.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.18%
Values	Daily Returns

Philippine Business Bank  vs.  Atok Big Wedge

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 6 (%) 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.

Atok Big Wedge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atok Big Wedge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Philippine Business and Atok Big

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

The idea behind Philippine Business Bank and Atok Big Wedge 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.