Correlation Between Rizal Commercial and RL Commercial

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

By analyzing existing cross correlation between Rizal Commercial Banking and RL Commercial REIT, you can compare the effects of market volatilities on Rizal Commercial and RL Commercial 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 Rizal Commercial with a short position of RL Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rizal Commercial and RL Commercial.

Diversification Opportunities for Rizal Commercial and RL Commercial

-0.62

Correlation Coefficient

Rizal Commercial  RL Commercial

Excellent diversification

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

Pair Corralation between Rizal Commercial and RL Commercial

Assuming the 90 days trading horizon Rizal Commercial Banking is expected to under-perform the RL Commercial. In addition to that, Rizal Commercial is 1.76 times more volatile than RL Commercial REIT. It trades about -0.02 of its total potential returns per unit of risk. RL Commercial REIT is currently generating about 0.32 per unit of volatility. If you would invest  636.00  in RL Commercial REIT on April 20, 2025 and sell it today you would earn a total of  110.00  from holding RL Commercial REIT or generate 17.3% return on investment over 90 days.

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

Rizal Commercial Banking  vs.  RL Commercial REIT

Rizal Commercial Banking

Risk-Adjusted Performance

Very Weak

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

RL Commercial REIT

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RL Commercial REIT are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, RL Commercial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rizal Commercial and RL Commercial

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

The idea behind Rizal Commercial Banking and RL Commercial REIT 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.