Correlation Between PXP Energy and Globe Telecom
Can any of the company-specific risk be diversified away by investing in both PXP Energy 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 PXP Energy and Globe Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PXP Energy Corp and Globe Telecom, you can compare the effects of market volatilities on PXP Energy 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 PXP Energy with a short position of Globe Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of PXP Energy and Globe Telecom.
Diversification Opportunities for PXP Energy and Globe Telecom
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PXP and Globe is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PXP Energy Corp and Globe Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Telecom and PXP Energy 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 PXP Energy Corp 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 PXP Energy i.e., PXP Energy and Globe Telecom go up and down completely randomly.
Pair Corralation between PXP Energy and Globe Telecom
Assuming the 90 days trading horizon PXP Energy Corp is expected to under-perform the Globe Telecom. In addition to that, PXP Energy is 2.5 times more volatile than Globe Telecom. It trades about -0.03 of its total potential returns per unit of risk. Globe Telecom is currently generating about 0.02 per unit of volatility. If you would invest 194,549 in Globe Telecom on August 29, 2024 and sell it today you would earn a total of 15,451 from holding Globe Telecom or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
PXP Energy Corp vs. Globe Telecom
Performance |
| Timeline |
| PXP Energy Corp |
| Globe Telecom |
PXP Energy and Globe Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PXP Energy and Globe Telecom
The main advantage of trading using opposite PXP Energy and Globe Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PXP Energy 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.| PXP Energy vs. Concepcion Industrial Corp | PXP Energy vs. Philex Mining Corp | PXP Energy vs. Transpacific Broadband Group | PXP Energy vs. Converge Information Communications |
| Globe Telecom vs. Allhome Corp | Globe Telecom vs. Jollibee Foods Corp | Globe Telecom vs. LFM Properties Corp | Globe Telecom vs. PXP Energy 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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