Correlation Between Globe Telecom and Philippine Business
Can any of the company-specific risk be diversified away by investing in both Globe Telecom and Philippine Business 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 Philippine Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Telecom and Philippine Business Bank, you can compare the effects of market volatilities on Globe Telecom and Philippine Business 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 Philippine Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Telecom and Philippine Business.
Diversification Opportunities for Globe Telecom and Philippine Business
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Globe and Philippine is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Globe Telecom and Philippine Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philippine Business Bank 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 Philippine Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philippine Business Bank has no effect on the direction of Globe Telecom i.e., Globe Telecom and Philippine Business go up and down completely randomly.
Pair Corralation between Globe Telecom and Philippine Business
Assuming the 90 days trading horizon Globe Telecom is expected to under-perform the Philippine Business. In addition to that, Globe Telecom is 2.34 times more volatile than Philippine Business Bank. It trades about -0.12 of its total potential returns per unit of risk. Philippine Business Bank is currently generating about 0.11 per unit of volatility. If you would invest 910.00 in Philippine Business Bank on August 29, 2024 and sell it today you would earn a total of 20.00 from holding Philippine Business Bank or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Telecom vs. Philippine Business Bank
Performance |
| Timeline |
| Globe Telecom |
| Philippine Business Bank |
Globe Telecom and Philippine Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Telecom and Philippine Business
The main advantage of trading using opposite Globe Telecom and Philippine Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Telecom position performs unexpectedly, Philippine Business 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 Philippine Business will offset losses from the drop in Philippine Business' long position.| Globe Telecom vs. Allhome Corp | Globe Telecom vs. Jollibee Foods Corp | Globe Telecom vs. LFM Properties Corp | Globe Telecom vs. PXP Energy Corp |
| Philippine Business vs. Apex Mining Co | Philippine Business vs. Pacificonline Systems | Philippine Business vs. SM Investments Corp | Philippine Business vs. Manila Mining 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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