Correlation Between Philippine Business and DigiPlus Interactive

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

Diversification Opportunities for Philippine Business and DigiPlus Interactive

0.18

Correlation Coefficient

Philippine Business  DigiPlus Interactive

Average diversification

The 3 months correlation between Philippine and DigiPlus is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Business Bank and DigiPlus Interactive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiPlus Interactive Corp 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 DigiPlus Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiPlus Interactive Corp has no effect on the direction of Philippine Business i.e., Philippine Business and DigiPlus Interactive go up and down completely randomly.

Pair Corralation between Philippine Business and DigiPlus Interactive

Assuming the 90 days trading horizon Philippine Business is expected to generate 2.94 times less return on investment than DigiPlus Interactive. But when comparing it to its historical volatility, Philippine Business Bank is 2.27 times less risky than DigiPlus Interactive. It trades about 0.04 of its potential returns per unit of risk. DigiPlus Interactive Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,545  in DigiPlus Interactive Corp on April 13, 2025 and sell it today you would earn a total of  235.00  from holding DigiPlus Interactive Corp or generate 6.63% return on investment over 90 days.

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

Philippine Business Bank  vs.  DigiPlus Interactive Corp

Philippine Business Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Philippine Business Bank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Philippine Business is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

DigiPlus Interactive Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DigiPlus Interactive Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, DigiPlus Interactive unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Philippine Business and DigiPlus Interactive

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

The idea behind Philippine Business Bank and DigiPlus Interactive Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.