Correlation Between Premiere Entertainment and Philippine National
Can any of the company-specific risk be diversified away by investing in both Premiere Entertainment and Philippine National 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 Premiere Entertainment and Philippine National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premiere Entertainment and Philippine National Bank, you can compare the effects of market volatilities on Premiere Entertainment and Philippine National 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 Premiere Entertainment with a short position of Philippine National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premiere Entertainment and Philippine National.
Diversification Opportunities for Premiere Entertainment and Philippine National
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Premiere and Philippine is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Premiere Entertainment and Philippine National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philippine National Bank and Premiere Entertainment 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 Premiere Entertainment are associated (or correlated) with Philippine National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philippine National Bank has no effect on the direction of Premiere Entertainment i.e., Premiere Entertainment and Philippine National go up and down completely randomly.
Pair Corralation between Premiere Entertainment and Philippine National
Assuming the 90 days trading horizon Premiere Entertainment is expected to generate 1.83 times more return on investment than Philippine National. However, Premiere Entertainment is 1.83 times more volatile than Philippine National Bank. It trades about 0.01 of its potential returns per unit of risk. Philippine National Bank is currently generating about -0.11 per unit of risk. If you would invest 19.00 in Premiere Entertainment on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Premiere Entertainment or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premiere Entertainment vs. Philippine National Bank
Performance |
| Timeline |
| Premiere Entertainment |
| Philippine National Bank |
Premiere Entertainment and Philippine National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premiere Entertainment and Philippine National
The main advantage of trading using opposite Premiere Entertainment and Philippine National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premiere Entertainment position performs unexpectedly, Philippine National 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 National will offset losses from the drop in Philippine National's long position.| Premiere Entertainment vs. Pacificonline Systems | Premiere Entertainment vs. Transpacific Broadband Group | Premiere Entertainment vs. Apex Mining Co | Premiere Entertainment vs. House of Investments |
| Philippine National vs. Globe Telecom | Philippine National vs. Crown Asia Chemicals | Philippine National vs. Philex Mining Corp | Philippine National 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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