Correlations of the price movements among the PSE indices as basis for technical analysis on stock prices for 2019-2023 / Arca, Xeleen Elizabeth N., Carreon, Abigail DP., Gemeniano, Pamela Joy T., Guillen, Wynona Alliah M., Mabunga, Twainy Grace T., Otial, Francheska S., Titong, Angel Shine A., Yanga, Nahya Zsanelle M. 6

Business Research: (BSBA major in Financial Management) - Pamantasan ng Lungsod ng Maynila, 2024. 56

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Abstract This study investigates the correlations of price movements among the six Philippine Stock Exchange (PSE) indices from 2019 to 2023 with the objective of developing a comprehensive technical analysis framework for stock prices. The indices examined include the Financials Index, Industrial Index, Holding Firms Index, Property Index, Services Index, and Mining & Oil Index. By exploring these correlations, the study aims to provide a strong analytical tool for investors, stockbrokers, financial institutions, and policymakers. This is particularly crucial in the context of economic disruptions such as elections, wars, pandemics, and natural calamities, which can significantly impact market dynamics. Technical analysis in stock markets involves evaluating securities through statistical trends from trading activity, such as price movement and volume. In the Philippine context, the lack of extensive research on inter-index correlations creates a challenge for market participants who rely on historical price data to make informed decisions. This study addresses this gap by analyzing the price movements of the six indices to establish a framework that enhances the precision of technical analysis in the Philippine Stock Exchange. The analysis spans a critical period marked by significant economic events, including the COVID-19 pandemic, political changes, and global economic shifts. Understanding the interrelationships among these indices during such times can provide insights into how different sectors respond to external shocks and what patterns can be discerned from their price movements. This can lead to better forecasting models and investment strategies. The study employs a quantitative research methodology, using historical price data from 2019 to 2023. Correlation analysis is the primary tool used to identify the relationships among the indices. The findings from this analysis are then utilized to develop a technical analysis framework tailored to the Philippine stock market. The study's significance lies in its potential to refine technical analysis methods, offering more reliable tools for evaluating stock price movements. The research reveals that the six PSE indices exhibit varying degrees of correlation in their price movements. Some indices may move in tandem due to shared economic drivers, while others might show inverse relationships, reflecting sector-specific trends or responses to economic shocks. These correlations are crucial for developing a technical analysis framework that can predict future price movements with greater accuracy. In conclusion, this study makes a significant contribution to the technical analysis of the Philippine stock market by providing a detailed examination of the correlations among the six PSE indices. The findings enhance the understanding of market dynamics and offer practical tools for investors and analysts to navigate the complexities of the stock market more effectively. This framework is particularly valuable in times of economic uncertainty or disruptions, providing a foundation for more strategic and informed investment decisions. Keywords: Philippine Stock Exchange Index, Stock Prices, price Movement, Correlation, Technical Tool/Analysis.

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