Correlation Between Converge Information and SM Prime

Can any of the company-specific risk be diversified away by investing in both Converge Information and SM Prime 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 SM Prime 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 SM Prime Holdings, you can compare the effects of market volatilities on Converge Information and SM Prime 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 SM Prime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Converge Information and SM Prime.

Diversification Opportunities for Converge Information and SM Prime

-0.33

Correlation Coefficient

Converge Information  SM Prime

Very good diversification

The 3 months correlation between Converge and SMPH is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Converge Information Communica and SM Prime Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Prime Holdings 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 SM Prime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Prime Holdings has no effect on the direction of Converge Information i.e., Converge Information and SM Prime go up and down completely randomly.

Pair Corralation between Converge Information and SM Prime

Assuming the 90 days trading horizon Converge Information Communications is expected to generate 0.97 times more return on investment than SM Prime. However, Converge Information Communications is 1.03 times less risky than SM Prime. It trades about -0.02 of its potential returns per unit of risk. SM Prime Holdings is currently generating about -0.09 per unit of risk. If you would invest  1,614  in Converge Information Communications on December 2, 2024 and sell it today you would lose (66.00) from holding Converge Information Communications or give up 4.09% of portfolio value over 90 days.

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

Converge Information Communica  vs.  SM Prime Holdings

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.

SM Prime Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days SM Prime Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Converge Information and SM Prime

The main advantage of trading using opposite Converge Information and SM Prime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Converge Information position performs unexpectedly, SM Prime 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 SM Prime will offset losses from the drop in SM Prime's long position.

The idea behind Converge Information Communications and SM Prime Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..