Correlation Between Globe Telecom and Cebu Landmasters
Can any of the company-specific risk be diversified away by investing in both Globe Telecom and Cebu Landmasters 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 Globe Telecom and Cebu Landmasters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Telecom and Cebu Landmasters, you can compare the effects of market volatilities on Globe Telecom and Cebu Landmasters 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 Globe Telecom with a short position of Cebu Landmasters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Telecom and Cebu Landmasters.
Diversification Opportunities for Globe Telecom and Cebu Landmasters
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Globe and Cebu is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Globe Telecom and Cebu Landmasters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Landmasters and Globe Telecom 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 Globe Telecom are associated (or correlated) with Cebu Landmasters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Landmasters has no effect on the direction of Globe Telecom i.e., Globe Telecom and Cebu Landmasters go up and down completely randomly.
Pair Corralation between Globe Telecom and Cebu Landmasters
Assuming the 90 days trading horizon Globe Telecom is expected to generate 1.23 times more return on investment than Cebu Landmasters. However, Globe Telecom is 1.23 times more volatile than Cebu Landmasters. It trades about -0.03 of its potential returns per unit of risk. Cebu Landmasters is currently generating about -0.05 per unit of risk. If you would invest 212,200 in Globe Telecom on January 12, 2025 and sell it today you would lose (2,400) from holding Globe Telecom or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Telecom vs. Cebu Landmasters
Performance |
| Timeline |
| Globe Telecom |
| Cebu Landmasters |
Globe Telecom and Cebu Landmasters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Telecom and Cebu Landmasters
The main advantage of trading using opposite Globe Telecom and Cebu Landmasters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Telecom position performs unexpectedly, Cebu Landmasters 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 Cebu Landmasters will offset losses from the drop in Cebu Landmasters' long position.| Globe Telecom vs. Asia United Bank | Globe Telecom vs. East West Banking | Globe Telecom vs. Suntrust Home Developers | Globe Telecom vs. BDO Unibank |
| Cebu Landmasters vs. Lepanto Consolidated Mining | Cebu Landmasters vs. Jollibee Foods Corp | Cebu Landmasters vs. East West Banking | Cebu Landmasters vs. SM Investments Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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