Correlation Between Prime Media and DMCI Holdings

Can any of the company-specific risk be diversified away by investing in both Prime Media and DMCI Holdings 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 Prime Media and DMCI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prime Media Holdings and DMCI Holdings, you can compare the effects of market volatilities on Prime Media and DMCI Holdings 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 Prime Media with a short position of DMCI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Media and DMCI Holdings.

Diversification Opportunities for Prime Media and DMCI Holdings

0.56

Correlation Coefficient

Prime Media  DMCI Holdings

Very weak diversification

The 3 months correlation between Prime and DMCI is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Prime Media Holdings and DMCI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DMCI Holdings and Prime Media 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 Prime Media Holdings are associated (or correlated) with DMCI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DMCI Holdings has no effect on the direction of Prime Media i.e., Prime Media and DMCI Holdings go up and down completely randomly.

Pair Corralation between Prime Media and DMCI Holdings

Assuming the 90 days trading horizon Prime Media Holdings is expected to under-perform the DMCI Holdings. In addition to that, Prime Media is 3.25 times more volatile than DMCI Holdings. It trades about -0.05 of its total potential returns per unit of risk. DMCI Holdings is currently generating about 0.05 per unit of volatility. If you would invest  1,106  in DMCI Holdings on October 26, 2024 and sell it today you would earn a total of  40.00  from holding DMCI Holdings or generate 3.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Prime Media Holdings  vs.  DMCI Holdings

Prime Media Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prime Media Holdings 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

DMCI Holdings

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DMCI Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, DMCI Holdings is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Prime Media and DMCI Holdings

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

The idea behind Prime Media Holdings and DMCI 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.