Correlation Between Integrated Micro and Globe Telecom

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

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

Diversification Opportunities for Integrated Micro and Globe Telecom

0.05

Correlation Coefficient

Integrated Micro  Globe Telecom

Significant diversification

The 3 months correlation between Integrated and Globe is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Micro Electronics and Globe Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Telecom and Integrated Micro 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 Integrated Micro Electronics 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 Integrated Micro i.e., Integrated Micro and Globe Telecom go up and down completely randomly.

Pair Corralation between Integrated Micro and Globe Telecom

Assuming the 90 days trading horizon Integrated Micro is expected to generate 2.06 times less return on investment than Globe Telecom. In addition to that, Integrated Micro is 2.28 times more volatile than Globe Telecom. It trades about 0.01 of its total potential returns per unit of risk. Globe Telecom is currently generating about 0.07 per unit of volatility. If you would invest  213,257  in Globe Telecom on December 29, 2024 and sell it today you would earn a total of  11,143  from holding Globe Telecom or generate 5.23% return on investment over 90 days.

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

Integrated Micro Electronics  vs.  Globe Telecom

Integrated Micro Ele

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Integrated Micro Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Integrated Micro is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Globe Telecom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Telecom are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Integrated Micro and Globe Telecom

The main advantage of trading using opposite Integrated Micro and Globe Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Micro 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 Integrated Micro Electronics 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.