Correlation Between Philippine Business and Integrated Micro

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

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

Diversification Opportunities for Philippine Business and Integrated Micro

-0.44

Correlation Coefficient

Philippine Business  Integrated Micro

Very good diversification

The 3 months correlation between Philippine and Integrated is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Business Bank and Integrated Micro Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Micro Ele and Philippine Business 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 Philippine Business Bank are associated (or correlated) with Integrated Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Micro Ele has no effect on the direction of Philippine Business i.e., Philippine Business and Integrated Micro go up and down completely randomly.

Pair Corralation between Philippine Business and Integrated Micro

Assuming the 90 days trading horizon Philippine Business Bank is expected to generate 0.65 times more return on investment than Integrated Micro. However, Philippine Business Bank is 1.54 times less risky than Integrated Micro. It trades about 0.13 of its potential returns per unit of risk. Integrated Micro Electronics is currently generating about 0.04 per unit of risk. If you would invest  755.00  in Philippine Business Bank on April 25, 2025 and sell it today you would earn a total of  133.00  from holding Philippine Business Bank or generate 17.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.67%
Values	Daily Returns

Philippine Business Bank  vs.  Integrated Micro Electronics

Philippine Business Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Philippine Business Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Philippine Business exhibited solid returns over the last few months and may actually be approaching a breakup point.

Integrated Micro Ele

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Philippine Business and Integrated Micro

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

The idea behind Philippine Business Bank and Integrated Micro Electronics 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.