Correlation Between Manila Electric and Premiere Entertainment
Can any of the company-specific risk be diversified away by investing in both Manila Electric and Premiere Entertainment 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 Manila Electric and Premiere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manila Electric Co and Premiere Entertainment, you can compare the effects of market volatilities on Manila Electric and Premiere Entertainment 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 Manila Electric with a short position of Premiere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manila Electric and Premiere Entertainment.
Diversification Opportunities for Manila Electric and Premiere Entertainment
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Manila and Premiere is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Manila Electric Co and Premiere Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premiere Entertainment and Manila Electric 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 Manila Electric Co are associated (or correlated) with Premiere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premiere Entertainment has no effect on the direction of Manila Electric i.e., Manila Electric and Premiere Entertainment go up and down completely randomly.
Pair Corralation between Manila Electric and Premiere Entertainment
Assuming the 90 days trading horizon Manila Electric Co is expected to generate 0.46 times more return on investment than Premiere Entertainment. However, Manila Electric Co is 2.19 times less risky than Premiere Entertainment. It trades about 0.08 of its potential returns per unit of risk. Premiere Entertainment is currently generating about 0.0 per unit of risk. If you would invest 25,205 in Manila Electric Co on September 13, 2024 and sell it today you would earn a total of 22,795 from holding Manila Electric Co or generate 90.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manila Electric Co vs. Premiere Entertainment
Performance |
| Timeline |
| Manila Electric |
| Premiere Entertainment |
Manila Electric and Premiere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manila Electric and Premiere Entertainment
The main advantage of trading using opposite Manila Electric and Premiere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manila Electric position performs unexpectedly, Premiere Entertainment 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 Premiere Entertainment will offset losses from the drop in Premiere Entertainment's long position.| Manila Electric vs. Premiere Entertainment | Manila Electric vs. Lepanto Consolidated Mining | Manila Electric vs. SM Investments Corp | Manila Electric vs. Converge Information Communications |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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