Correlation Between Globe Telecom and Dizon Copper

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

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

Diversification Opportunities for Globe Telecom and Dizon Copper

0.45

Correlation Coefficient

Globe Telecom  Dizon Copper

Very weak diversification

The 3 months correlation between Globe and Dizon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Globe Telecom and Dizon Copper Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dizon Copper Silver and Globe Telecom 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 Globe Telecom are associated (or correlated) with Dizon Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dizon Copper Silver has no effect on the direction of Globe Telecom i.e., Globe Telecom and Dizon Copper go up and down completely randomly.

Pair Corralation between Globe Telecom and Dizon Copper

Assuming the 90 days trading horizon Globe Telecom is expected to generate 0.19 times more return on investment than Dizon Copper. However, Globe Telecom is 5.3 times less risky than Dizon Copper. It trades about 0.01 of its potential returns per unit of risk. Dizon Copper Silver is currently generating about -0.02 per unit of risk. If you would invest  199,773  in Globe Telecom on September 25, 2024 and sell it today you would earn a total of  9,827  from holding Globe Telecom or generate 4.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	34.5%
Values	Daily Returns

Globe Telecom  vs.  Dizon Copper Silver

Globe Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Telecom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Globe Telecom is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Dizon Copper Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dizon Copper Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Globe Telecom and Dizon Copper

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

The idea behind Globe Telecom and Dizon Copper Silver 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.