Correlation Between Philippine Business and Converge Information
Can any of the company-specific risk be diversified away by investing in both Philippine Business and Converge Information 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 Philippine Business and Converge Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philippine Business Bank and Converge Information Communications, you can compare the effects of market volatilities on Philippine Business and Converge Information 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 Philippine Business with a short position of Converge Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Business and Converge Information.
Diversification Opportunities for Philippine Business and Converge Information
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Philippine and Converge is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Business Bank and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information and Philippine Business 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 Philippine Business Bank are associated (or correlated) with Converge Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Information has no effect on the direction of Philippine Business i.e., Philippine Business and Converge Information go up and down completely randomly.
Pair Corralation between Philippine Business and Converge Information
Assuming the 90 days trading horizon Philippine Business Bank is expected to generate 1.35 times more return on investment than Converge Information. However, Philippine Business is 1.35 times more volatile than Converge Information Communications. It trades about 0.04 of its potential returns per unit of risk. Converge Information Communications is currently generating about 0.04 per unit of risk. If you would invest 915.00 in Philippine Business Bank on November 28, 2024 and sell it today you would earn a total of 14.00 from holding Philippine Business Bank or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.27% |
| Values | Daily Returns |
Philippine Business Bank vs. Converge Information Communica
Performance |
| Timeline |
| Philippine Business Bank |
| Converge Information |
Philippine Business and Converge Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Business and Converge Information
The main advantage of trading using opposite Philippine Business and Converge Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Business position performs unexpectedly, Converge Information 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 Converge Information will offset losses from the drop in Converge Information's long position.| Philippine Business vs. Transpacific Broadband Group | Philippine Business vs. Philex Mining Corp | Philippine Business vs. Converge Information Communications | Philippine Business vs. Jollibee Foods Corp |
| Converge Information vs. Transpacific Broadband Group | Converge Information vs. Prime Media Holdings | Converge Information vs. Security Bank Corp | Converge Information vs. Top Frontier Investment |
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 Stocks Directory module to find actively traded stocks across global markets.
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