Correlation Between Aboitiz Equity and PLDT

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

By analyzing existing cross correlation between Aboitiz Equity Ventures and PLDT Inc, you can compare the effects of market volatilities on Aboitiz Equity and PLDT 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 Aboitiz Equity with a short position of PLDT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aboitiz Equity and PLDT.

Diversification Opportunities for Aboitiz Equity and PLDT

0.91

Correlation Coefficient

Aboitiz Equity  PLDT

Almost no diversification

The 3 months correlation between Aboitiz and PLDT is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Aboitiz Equity Ventures and PLDT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc and Aboitiz Equity 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 Aboitiz Equity Ventures are associated (or correlated) with PLDT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLDT Inc has no effect on the direction of Aboitiz Equity i.e., Aboitiz Equity and PLDT go up and down completely randomly.

Pair Corralation between Aboitiz Equity and PLDT

Assuming the 90 days trading horizon Aboitiz Equity Ventures is expected to generate 0.92 times more return on investment than PLDT. However, Aboitiz Equity Ventures is 1.09 times less risky than PLDT. It trades about -0.06 of its potential returns per unit of risk. PLDT Inc is currently generating about -0.17 per unit of risk. If you would invest  3,385  in Aboitiz Equity Ventures on September 23, 2024 and sell it today you would lose (85.00) from holding Aboitiz Equity Ventures or give up 2.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Aboitiz Equity Ventures  vs.  PLDT Inc

Aboitiz Equity Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aboitiz Equity Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

PLDT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLDT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aboitiz Equity and PLDT

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

The idea behind Aboitiz Equity Ventures and PLDT Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.