Correlation Between THE PHILIPPINE and Ever Gotesco

Can any of the company-specific risk be diversified away by investing in both THE PHILIPPINE and Ever Gotesco 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 THE PHILIPPINE and Ever Gotesco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between THE PHILIPPINE STOCK and Ever Gotesco Resources, you can compare the effects of market volatilities on THE PHILIPPINE and Ever Gotesco 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 THE PHILIPPINE with a short position of Ever Gotesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE PHILIPPINE and Ever Gotesco.

Diversification Opportunities for THE PHILIPPINE and Ever Gotesco

0.52

Correlation Coefficient

THE PHILIPPINE  Ever Gotesco

Very weak diversification

The 3 months correlation between THE and Ever is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding THE PHILIPPINE STOCK and Ever Gotesco Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ever Gotesco Resources and THE PHILIPPINE 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 THE PHILIPPINE STOCK are associated (or correlated) with Ever Gotesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ever Gotesco Resources has no effect on the direction of THE PHILIPPINE i.e., THE PHILIPPINE and Ever Gotesco go up and down completely randomly.

Pair Corralation between THE PHILIPPINE and Ever Gotesco

Assuming the 90 days trading horizon THE PHILIPPINE STOCK is expected to generate 0.35 times more return on investment than Ever Gotesco. However, THE PHILIPPINE STOCK is 2.82 times less risky than Ever Gotesco. It trades about 0.02 of its potential returns per unit of risk. Ever Gotesco Resources is currently generating about -0.01 per unit of risk. If you would invest  636,880  in THE PHILIPPINE STOCK on October 13, 2024 and sell it today you would earn a total of  12,752  from holding THE PHILIPPINE STOCK or generate 2.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.86%
Values	Daily Returns

THE PHILIPPINE STOCK  vs.  Ever Gotesco Resources

Pair Trading with THE PHILIPPINE and Ever Gotesco

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

The idea behind THE PHILIPPINE STOCK and Ever Gotesco Resources 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.