Correlation Between Globe Telecom and LFM Properties
Can any of the company-specific risk be diversified away by investing in both Globe Telecom and LFM Properties 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 LFM Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Telecom and LFM Properties Corp, you can compare the effects of market volatilities on Globe Telecom and LFM Properties 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 LFM Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Telecom and LFM Properties.
Diversification Opportunities for Globe Telecom and LFM Properties
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Globe and LFM is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Globe Telecom and LFM Properties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LFM Properties Corp 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 LFM Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LFM Properties Corp has no effect on the direction of Globe Telecom i.e., Globe Telecom and LFM Properties go up and down completely randomly.
Pair Corralation between Globe Telecom and LFM Properties
Assuming the 90 days trading horizon Globe Telecom is expected to generate 1.18 times less return on investment than LFM Properties. But when comparing it to its historical volatility, Globe Telecom is 6.58 times less risky than LFM Properties. It trades about 0.04 of its potential returns per unit of risk. LFM Properties Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 12.00 in LFM Properties Corp on November 5, 2024 and sell it today you would lose (7.20) from holding LFM Properties Corp or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 55.95% |
| Values | Daily Returns |
Globe Telecom vs. LFM Properties Corp
Performance |
| Timeline |
| Globe Telecom |
| LFM Properties Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Globe Telecom and LFM Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Telecom and LFM Properties
The main advantage of trading using opposite Globe Telecom and LFM Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Telecom position performs unexpectedly, LFM Properties 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 LFM Properties will offset losses from the drop in LFM Properties' long position.| Globe Telecom vs. Semirara Mining Corp | Globe Telecom vs. Philex Mining Corp | Globe Telecom vs. Metro Retail Stores | Globe Telecom vs. Philippine Savings Bank |
| LFM Properties vs. House of Investments | LFM Properties vs. Philex Mining Corp | LFM Properties vs. Figaro Coffee Group | LFM Properties vs. Lepanto Consolidated Mining |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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