Correlation Between Globe Telecom and Top Frontier
Can any of the company-specific risk be diversified away by investing in both Globe Telecom and Top Frontier 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 Top Frontier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Telecom and Top Frontier Investment, you can compare the effects of market volatilities on Globe Telecom and Top Frontier 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 Top Frontier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Telecom and Top Frontier.
Diversification Opportunities for Globe Telecom and Top Frontier
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Globe and Top is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Globe Telecom and Top Frontier Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Frontier Investment 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 Top Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Frontier Investment has no effect on the direction of Globe Telecom i.e., Globe Telecom and Top Frontier go up and down completely randomly.
Pair Corralation between Globe Telecom and Top Frontier
Assuming the 90 days trading horizon Globe Telecom is expected to under-perform the Top Frontier. But the stock apears to be less risky and, when comparing its historical volatility, Globe Telecom is 2.72 times less risky than Top Frontier. The stock trades about -0.02 of its potential returns per unit of risk. The Top Frontier Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,500 in Top Frontier Investment on September 1, 2024 and sell it today you would earn a total of 100.00 from holding Top Frontier Investment or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Globe Telecom vs. Top Frontier Investment
Performance |
| Timeline |
| Globe Telecom |
| Top Frontier Investment |
Globe Telecom and Top Frontier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Telecom and Top Frontier
The main advantage of trading using opposite Globe Telecom and Top Frontier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Telecom position performs unexpectedly, Top Frontier 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 Top Frontier will offset losses from the drop in Top Frontier's long position.| Globe Telecom vs. Century Pacific Food | Globe Telecom vs. Pacificonline Systems | Globe Telecom vs. Manulife Financial Corp | Globe Telecom vs. Union Bank of |
| Top Frontier vs. Converge Information Communications | Top Frontier vs. Bank of the | Top Frontier vs. Robinsons Retail Holdings | Top Frontier vs. COL Financial Group |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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