Correlation Between Cogent Communications and PLDT

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

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

Diversification Opportunities for Cogent Communications and PLDT

0.35

Correlation Coefficient

Cogent Communications  PLDT

Weak diversification

The 3 months correlation between Cogent and PLDT is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Group and PLDT Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc ADR and Cogent Communications 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 Cogent Communications Group 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 ADR has no effect on the direction of Cogent Communications i.e., Cogent Communications and PLDT go up and down completely randomly.

Pair Corralation between Cogent Communications and PLDT

Given the investment horizon of 90 days Cogent Communications Group is expected to under-perform the PLDT. In addition to that, Cogent Communications is 1.47 times more volatile than PLDT Inc ADR. It trades about -0.12 of its total potential returns per unit of risk. PLDT Inc ADR is currently generating about -0.03 per unit of volatility. If you would invest  2,285  in PLDT Inc ADR on October 11, 2024 and sell it today you would lose (19.00) from holding PLDT Inc ADR or give up 0.83% of portfolio value over 90 days.

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

Cogent Communications Group  vs.  PLDT Inc ADR

Cogent Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cogent Communications Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

PLDT Inc ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLDT Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Cogent Communications and PLDT

The main advantage of trading using opposite Cogent Communications and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications 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 Cogent Communications Group and PLDT Inc ADR 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.