Correlation Between Premiere Entertainment and SM Investments
Can any of the company-specific risk be diversified away by investing in both Premiere Entertainment and SM Investments 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 SM Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premiere Entertainment and SM Investments Corp, you can compare the effects of market volatilities on Premiere Entertainment and SM Investments 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 SM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premiere Entertainment and SM Investments.
Diversification Opportunities for Premiere Entertainment and SM Investments
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Premiere and SM Investments is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Premiere Entertainment and SM Investments Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments Corp 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 SM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Investments Corp has no effect on the direction of Premiere Entertainment i.e., Premiere Entertainment and SM Investments go up and down completely randomly.
Pair Corralation between Premiere Entertainment and SM Investments
Assuming the 90 days trading horizon Premiere Entertainment is expected to generate 1.34 times more return on investment than SM Investments. However, Premiere Entertainment is 1.34 times more volatile than SM Investments Corp. It trades about 0.02 of its potential returns per unit of risk. SM Investments Corp is currently generating about -0.16 per unit of risk. If you would invest 18.00 in Premiere Entertainment on August 27, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premiere Entertainment vs. SM Investments Corp
Performance |
| Timeline |
| Premiere Entertainment |
| SM Investments Corp |
Premiere Entertainment and SM Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premiere Entertainment and SM Investments
The main advantage of trading using opposite Premiere Entertainment and SM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premiere Entertainment position performs unexpectedly, SM Investments 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 SM Investments will offset losses from the drop in SM Investments' long position.| Premiere Entertainment vs. Philippine Business Bank | Premiere Entertainment vs. Semirara Mining Corp | Premiere Entertainment vs. Prime Media Holdings | Premiere Entertainment vs. Metropolitan Bank Trust |
| SM Investments vs. Apex Mining Co | SM Investments vs. Transpacific Broadband Group | SM Investments vs. Manila Mining Corp | SM Investments vs. Premiere Entertainment |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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