Correlation Between Philippine Business and Cosco Capital

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

Diversification Opportunities for Philippine Business and Cosco Capital

0.22

Correlation Coefficient

Philippine Business  Cosco Capital

Modest diversification

The 3 months correlation between Philippine and Cosco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Business Bank and Cosco Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosco Capital 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 Cosco Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosco Capital has no effect on the direction of Philippine Business i.e., Philippine Business and Cosco Capital go up and down completely randomly.

Pair Corralation between Philippine Business and Cosco Capital

Assuming the 90 days trading horizon Philippine Business is expected to generate 1.22 times less return on investment than Cosco Capital. In addition to that, Philippine Business is 1.81 times more volatile than Cosco Capital. It trades about 0.12 of its total potential returns per unit of risk. Cosco Capital is currently generating about 0.26 per unit of volatility. If you would invest  572.00  in Cosco Capital on April 23, 2025 and sell it today you would earn a total of  135.00  from holding Cosco Capital or generate 23.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Philippine Business Bank  vs.  Cosco Capital

Philippine Business Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Philippine Business Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Philippine Business exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cosco Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cosco Capital are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Cosco Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Philippine Business and Cosco Capital

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

The idea behind Philippine Business Bank and Cosco Capital 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.