Correlation Between Converge Information and Globe Telecom

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

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

Diversification Opportunities for Converge Information and Globe Telecom

0.51

Correlation Coefficient

Converge Information  Globe Telecom

Very weak diversification

The 3 months correlation between Converge and Globe is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Converge Information Communica and Globe Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Telecom and Converge Information 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 Converge Information Communications 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 Converge Information i.e., Converge Information and Globe Telecom go up and down completely randomly.

Pair Corralation between Converge Information and Globe Telecom

Assuming the 90 days trading horizon Converge Information Communications is expected to under-perform the Globe Telecom. In addition to that, Converge Information is 1.83 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 0.1 per unit of volatility. If you would invest  210,685  in Globe Telecom on December 2, 2024 and sell it today you would earn a total of  16,715  from holding Globe Telecom or generate 7.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Converge Information Communica  vs.  Globe Telecom

Converge Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Converge Information Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Converge Information is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Globe Telecom

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Telecom are ranked lower than 8 (%) 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 April 2025.

Pair Trading with Converge Information and Globe Telecom

The main advantage of trading using opposite Converge Information and Globe Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Converge Information 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 Converge Information Communications 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.