Correlation Between SM Investments and Prime Media
Can any of the company-specific risk be diversified away by investing in both SM Investments and Prime Media 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 Prime Media 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 Prime Media Holdings, you can compare the effects of market volatilities on SM Investments and Prime Media 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 Prime Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and Prime Media.
Diversification Opportunities for SM Investments and Prime Media
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SM Investments and Prime is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments Corp and Prime Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Media Holdings 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 Prime Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Media Holdings has no effect on the direction of SM Investments i.e., SM Investments and Prime Media go up and down completely randomly.
Pair Corralation between SM Investments and Prime Media
Assuming the 90 days trading horizon SM Investments Corp is expected to under-perform the Prime Media. But the stock apears to be less risky and, when comparing its historical volatility, SM Investments Corp is 2.77 times less risky than Prime Media. The stock trades about -0.45 of its potential returns per unit of risk. The Prime Media Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 191.00 in Prime Media Holdings on November 4, 2024 and sell it today you would earn a total of 4.00 from holding Prime Media Holdings or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
SM Investments Corp vs. Prime Media Holdings
Performance |
| Timeline |
| SM Investments Corp |
| Prime Media Holdings |
SM Investments and Prime Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and Prime Media
The main advantage of trading using opposite SM Investments and Prime Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Investments position performs unexpectedly, Prime Media 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 Prime Media will offset losses from the drop in Prime Media's long position.| SM Investments vs. Philex Mining Corp | SM Investments vs. House of Investments | SM Investments vs. COL Financial Group | SM Investments vs. Jollibee Foods Corp |
| Prime Media vs. Premiere Entertainment | Prime Media vs. National Reinsurance | Prime Media vs. Lepanto Consolidated Mining | Prime Media 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 Stocks Directory module to find actively traded stocks across global markets.
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