Correlation Between STI Education and Converge Information
Can any of the company-specific risk be diversified away by investing in both STI Education 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 STI Education and Converge Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STI Education Systems and Converge Information Communications, you can compare the effects of market volatilities on STI Education 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 STI Education with a short position of Converge Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of STI Education and Converge Information.
Diversification Opportunities for STI Education and Converge Information
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between STI and Converge is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding STI Education Systems and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information and STI Education 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 STI Education Systems 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 STI Education i.e., STI Education and Converge Information go up and down completely randomly.
Pair Corralation between STI Education and Converge Information
Assuming the 90 days trading horizon STI Education Systems is expected to generate 1.45 times more return on investment than Converge Information. However, STI Education is 1.45 times more volatile than Converge Information Communications. It trades about 0.27 of its potential returns per unit of risk. Converge Information Communications is currently generating about 0.22 per unit of risk. If you would invest 125.00 in STI Education Systems on October 20, 2024 and sell it today you would earn a total of 15.00 from holding STI Education Systems or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STI Education Systems vs. Converge Information Communica
Performance |
| Timeline |
| STI Education Systems |
| Converge Information |
STI Education and Converge Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STI Education and Converge Information
The main advantage of trading using opposite STI Education and Converge Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STI Education 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.| STI Education vs. Philippine Business Bank | STI Education vs. Converge Information Communications | STI Education vs. Philex Mining Corp | STI Education vs. Apex Mining Co |
| Converge Information vs. Atlas Consolidated Mining | Converge Information vs. Suntrust Home Developers | Converge Information vs. National Reinsurance | Converge Information vs. Lepanto Consolidated Mining |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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