Correlation Between Globe Telecom and Lepanto Consolidated

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

By analyzing existing cross correlation between Globe Telecom and Lepanto Consolidated Mining, you can compare the effects of market volatilities on Globe Telecom and Lepanto Consolidated 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 Lepanto Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Telecom and Lepanto Consolidated.

Diversification Opportunities for Globe Telecom and Lepanto Consolidated

0.24

Correlation Coefficient

Globe Telecom  Lepanto Consolidated

Modest diversification

The 3 months correlation between Globe and Lepanto is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Globe Telecom and Lepanto Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepanto Consolidated 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 Lepanto Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lepanto Consolidated has no effect on the direction of Globe Telecom i.e., Globe Telecom and Lepanto Consolidated go up and down completely randomly.

Pair Corralation between Globe Telecom and Lepanto Consolidated

Assuming the 90 days trading horizon Globe Telecom is expected to under-perform the Lepanto Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, Globe Telecom is 1.91 times less risky than Lepanto Consolidated. The stock trades about -0.03 of its potential returns per unit of risk. The Lepanto Consolidated Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6.50  in Lepanto Consolidated Mining on September 3, 2024 and sell it today you would earn a total of  0.40  from holding Lepanto Consolidated Mining or generate 6.15% return on investment over 90 days.

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

Globe Telecom  vs.  Lepanto Consolidated Mining

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.

Lepanto Consolidated

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lepanto Consolidated Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Lepanto Consolidated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Globe Telecom and Lepanto Consolidated

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

The idea behind Globe Telecom and Lepanto Consolidated Mining 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.