Correlation Between THE PHILIPPINE and Globe Telecom
Can any of the company-specific risk be diversified away by investing in both THE PHILIPPINE and Globe Telecom 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 THE PHILIPPINE and Globe Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THE PHILIPPINE STOCK and Globe Telecom, you can compare the effects of market volatilities on THE PHILIPPINE and Globe Telecom 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 THE PHILIPPINE with a short position of Globe Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE PHILIPPINE and Globe Telecom.
Diversification Opportunities for THE PHILIPPINE and Globe Telecom
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between THE and Globe is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding THE PHILIPPINE STOCK and Globe Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Telecom and THE PHILIPPINE 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 THE PHILIPPINE STOCK are associated (or correlated) with Globe Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Telecom has no effect on the direction of THE PHILIPPINE i.e., THE PHILIPPINE and Globe Telecom go up and down completely randomly.
Pair Corralation between THE PHILIPPINE and Globe Telecom
Assuming the 90 days trading horizon THE PHILIPPINE is expected to generate 2.32 times less return on investment than Globe Telecom. But when comparing it to its historical volatility, THE PHILIPPINE STOCK is 1.56 times less risky than Globe Telecom. It trades about 0.04 of its potential returns per unit of risk. Globe Telecom is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 192,559 in Globe Telecom on August 29, 2024 and sell it today you would earn a total of 19,041 from holding Globe Telecom or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THE PHILIPPINE STOCK vs. Globe Telecom
Performance |
| Timeline |
THE PHILIPPINE and Globe Telecom Volatility Contrast
Predicted Return Density |
| Returns |
THE PHILIPPINE STOCK
Pair trading matchups for THE PHILIPPINE
Globe Telecom
Pair trading matchups for Globe Telecom
Pair Trading with THE PHILIPPINE and Globe Telecom
The main advantage of trading using opposite THE PHILIPPINE and Globe Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THE PHILIPPINE position performs unexpectedly, Globe Telecom 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 Globe Telecom will offset losses from the drop in Globe Telecom's long position.| THE PHILIPPINE vs. Lepanto Consolidated Mining | THE PHILIPPINE vs. Top Frontier Investment | THE PHILIPPINE vs. Jollibee Foods Corp | THE PHILIPPINE vs. Apex Mining Co |
| Globe Telecom vs. PLDT Inc | Globe Telecom vs. Allhome Corp | Globe Telecom vs. Jollibee Foods Corp | Globe Telecom 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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