Correlation Between Philippine Business and Prime Media
Can any of the company-specific risk be diversified away by investing in both Philippine Business and Prime Media 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 Prime Media 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 Prime Media Holdings, you can compare the effects of market volatilities on Philippine Business and Prime Media 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 Prime Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Business and Prime Media.
Diversification Opportunities for Philippine Business and Prime Media
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Philippine and Prime is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Business Bank and Prime Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Media Holdings 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 Prime Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Media Holdings has no effect on the direction of Philippine Business i.e., Philippine Business and Prime Media go up and down completely randomly.
Pair Corralation between Philippine Business and Prime Media
Assuming the 90 days trading horizon Philippine Business Bank is expected to generate 0.28 times more return on investment than Prime Media. However, Philippine Business Bank is 3.52 times less risky than Prime Media. It trades about 0.06 of its potential returns per unit of risk. Prime Media Holdings is currently generating about -0.29 per unit of risk. If you would invest 920.00 in Philippine Business Bank on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Philippine Business Bank or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Philippine Business Bank vs. Prime Media Holdings
Performance |
| Timeline |
| Philippine Business Bank |
| Prime Media Holdings |
Philippine Business and Prime Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Business and Prime Media
The main advantage of trading using opposite Philippine Business and Prime Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Business position performs unexpectedly, Prime Media 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 Prime Media will offset losses from the drop in Prime Media's long position.| Philippine Business vs. Metropolitan Bank Trust | Philippine Business vs. Philippine National Bank | Philippine Business vs. Asia United Bank | Philippine Business vs. Philippine Savings Bank |
| Prime Media vs. GT Capital Holdings | Prime Media vs. Allhome Corp | Prime Media vs. Jollibee Foods Corp | Prime Media vs. LFM Properties 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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