Correlation Between Transpacific Broadband and Philippine Business
Can any of the company-specific risk be diversified away by investing in both Transpacific Broadband and Philippine Business 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 Transpacific Broadband and Philippine Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transpacific Broadband Group and Philippine Business Bank, you can compare the effects of market volatilities on Transpacific Broadband and Philippine Business 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 Transpacific Broadband with a short position of Philippine Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transpacific Broadband and Philippine Business.
Diversification Opportunities for Transpacific Broadband and Philippine Business
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transpacific and Philippine is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Transpacific Broadband Group and Philippine Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philippine Business Bank and Transpacific Broadband 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 Transpacific Broadband Group are associated (or correlated) with Philippine Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philippine Business Bank has no effect on the direction of Transpacific Broadband i.e., Transpacific Broadband and Philippine Business go up and down completely randomly.
Pair Corralation between Transpacific Broadband and Philippine Business
If you would invest 915.00 in Philippine Business Bank on November 28, 2024 and sell it today you would earn a total of 14.00 from holding Philippine Business Bank or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Transpacific Broadband Group vs. Philippine Business Bank
Performance |
| Timeline |
| Transpacific Broadband |
| Philippine Business Bank |
Transpacific Broadband and Philippine Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transpacific Broadband and Philippine Business
The main advantage of trading using opposite Transpacific Broadband and Philippine Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transpacific Broadband position performs unexpectedly, Philippine Business 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 Philippine Business will offset losses from the drop in Philippine Business' long position.The idea behind Transpacific Broadband Group and Philippine Business Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Philippine Business vs. Transpacific Broadband Group | Philippine Business vs. Philex Mining Corp | Philippine Business vs. Converge Information Communications | Philippine Business vs. Jollibee Foods 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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