Correlation Between Concepcion Industrial and Globe Telecom

Can any of the company-specific risk be diversified away by investing in both Concepcion Industrial 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 Concepcion Industrial and Globe Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Concepcion Industrial Corp and Globe Telecom, you can compare the effects of market volatilities on Concepcion Industrial 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 Concepcion Industrial with a short position of Globe Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concepcion Industrial and Globe Telecom.

Diversification Opportunities for Concepcion Industrial and Globe Telecom

0.08

Correlation Coefficient

Concepcion Industrial  Globe Telecom

Significant diversification

The 3 months correlation between Concepcion and Globe is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Concepcion Industrial Corp and Globe Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Telecom and Concepcion Industrial 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 Concepcion Industrial 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 Concepcion Industrial i.e., Concepcion Industrial and Globe Telecom go up and down completely randomly.

Pair Corralation between Concepcion Industrial and Globe Telecom

Assuming the 90 days trading horizon Concepcion Industrial is expected to generate 3.12 times less return on investment than Globe Telecom. In addition to that, Concepcion Industrial is 1.05 times more volatile than Globe Telecom. It trades about 0.04 of its total potential returns per unit of risk. Globe Telecom is currently generating about 0.12 per unit of volatility. If you would invest  207,717  in Globe Telecom on November 29, 2024 and sell it today you would earn a total of  19,283  from holding Globe Telecom or generate 9.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.66%
Values	Daily Returns

Concepcion Industrial Corp  vs.  Globe Telecom

Concepcion Industrial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Concepcion Industrial Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Concepcion Industrial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Globe Telecom

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Telecom are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Globe Telecom may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Concepcion Industrial and Globe Telecom

The main advantage of trading using opposite Concepcion Industrial and Globe Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Concepcion Industrial 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.

The idea behind Concepcion Industrial Corp and Globe Telecom 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.