Correlation Between SM Investments and Converge Information
Can any of the company-specific risk be diversified away by investing in both SM Investments and Converge Information 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 SM Investments and Converge Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Investments Corp and Converge Information Communications, you can compare the effects of market volatilities on SM Investments and Converge Information 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 SM Investments with a short position of Converge Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and Converge Information.
Diversification Opportunities for SM Investments and Converge Information
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between SM Investments and Converge is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments Corp and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information and SM Investments 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 SM Investments Corp are associated (or correlated) with Converge Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Information has no effect on the direction of SM Investments i.e., SM Investments and Converge Information go up and down completely randomly.
Pair Corralation between SM Investments and Converge Information
Assuming the 90 days trading horizon SM Investments Corp is expected to under-perform the Converge Information. But the stock apears to be less risky and, when comparing its historical volatility, SM Investments Corp is 1.22 times less risky than Converge Information. The stock trades about -0.09 of its potential returns per unit of risk. The Converge Information Communications is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,628 in Converge Information Communications on October 26, 2024 and sell it today you would earn a total of 162.00 from holding Converge Information Communications or generate 9.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Investments Corp vs. Converge Information Communica
Performance |
| Timeline |
| SM Investments Corp |
| Converge Information |
SM Investments and Converge Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and Converge Information
The main advantage of trading using opposite SM Investments and Converge Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, Converge Information 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 Converge Information will offset losses from the drop in Converge Information's long position.| SM Investments vs. Lepanto Consolidated Mining | SM Investments vs. Rizal Commercial Banking | SM Investments vs. Philippine Business Bank | SM Investments vs. National Reinsurance |
| Converge Information vs. BDO Unibank | Converge Information vs. National Reinsurance | Converge Information vs. Rizal Commercial Banking | Converge Information vs. Semirara Mining 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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