- What is Correlation with PSE Index
- How to use Correlation with PSE Index
- Tsupitero Features
In a news published by Inquirer dated on October 20, 2016, Credit rater Standard & Poor’s, the world’s leading index provider that publishes financial research and analysis on stocks, bonds, and commodities, has tagged the Philippines as the world’s strongest major emerging market.
Read along! In this tsupitero blog, we will define and discuss how to use Correlation with PSE Index in creating choices for you.
What is Correlation with PSE Index
By definition, correlation means a connection between two or more things. Or in tagalog, correlation means “kamukha”.
On the other hand, PSE Index also called as PSEi is the benchmark that measures the performance of the Philippine stock market. It is composed of 30 largest company in the Philippines carefully selected to represent the general movement of the stock market.
In Tsupitero.com, we created a program that will scan the 300+ listed companies and find out kung sinong graph ang pinaka-kamukha ni PSEi. By default, we use the five-days latest closing price of a company and the five-days latest closing price of PSEi for the comparison.
For example, the five-day closing price graph of PSEi forms an image like a letter “M”. Looking at the other charts, a certain five-day closing price graph of a company also forms an image like a letter “M” with the same slope, stroke, curve, etc. of that of PSEi. Therefore, this company and PSEi is positively correlated. In tagalog, aprub! Magkamukha!
How to use Correlation with PSE Index
Most of the fund managers, investors, and market analysts always look at the PSEi to know the general outlook of our stock market. Recently, mutual fund companies like PAMI of Philam Life has offered a new fund called Pami Philam Equity Index Fund wherein the fund will only be invested in companies that are part of PSEi.
In a bull market, PSEi goes up. However, you cannot buy PSEi because it is only an index. What you might be interested to know is which stock among the 300+ listed companies has the closest resemblance with PSEi so that you can buy that company.
The opposite happens in a bearish market where the PSEi goes down. At this time, you might be interested to know which company has the opposite resemblance to PSEi to avoid buying a company that will likely go down with the trend.
Tsupitero Basic Feature
In Tsupitero Basic feature of Correlation with PSEi, you can see which stock is most correlated or least correlated with PSEi. The rating is from 1 to -1. With 1 having the most correlated, and opposite for -1. And yep, you can also sort it by which category you want. By default, the period of comparison uses the five-days latest closing prices.
Now, you have choices, to begin with. The actual step in using this tsupitero feature can be found below.
By default, the period for comparison of correlation with PSEi uses five-days latest closing prices. With the Premium feature, you can change this value to whatever you want so that you can align the results with the data you need. Do you have any suggestions in your mind? Comment below! There are many benefits of a premium user, be sure to read other blogs to learn more. Register Today!