Correlation Between Manila Electric and Easycall Communications

Can any of the company-specific risk be diversified away by investing in both Manila Electric and Easycall Communications 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 Manila Electric and Easycall Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Manila Electric Co and Easycall Communications Philippines, you can compare the effects of market volatilities on Manila Electric and Easycall Communications 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 Manila Electric with a short position of Easycall Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manila Electric and Easycall Communications.

Diversification Opportunities for Manila Electric and Easycall Communications

-0.19

Correlation Coefficient

Manila Electric  Easycall Communications

Good diversification

The 3 months correlation between Manila and Easycall is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Manila Electric Co and Easycall Communications Philip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easycall Communications and Manila Electric 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 Manila Electric Co are associated (or correlated) with Easycall Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easycall Communications has no effect on the direction of Manila Electric i.e., Manila Electric and Easycall Communications go up and down completely randomly.

Pair Corralation between Manila Electric and Easycall Communications

Assuming the 90 days trading horizon Manila Electric is expected to generate 150.94 times less return on investment than Easycall Communications. But when comparing it to its historical volatility, Manila Electric Co is 4.73 times less risky than Easycall Communications. It trades about 0.01 of its potential returns per unit of risk. Easycall Communications Philippines is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  215.00  in Easycall Communications Philippines on October 12, 2024 and sell it today you would earn a total of  65.00  from holding Easycall Communications Philippines or generate 30.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.0%
Values	Daily Returns

Manila Electric Co  vs.  Easycall Communications Philip

Manila Electric

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manila Electric Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Manila Electric is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Easycall Communications

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Easycall Communications Philippines are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Easycall Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Manila Electric and Easycall Communications

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

The idea behind Manila Electric Co and Easycall Communications Philippines 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.