Correlation Between Concepcion Industrial and PLDT

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

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

Diversification Opportunities for Concepcion Industrial and PLDT

0.81

Correlation Coefficient

Concepcion Industrial  PLDT

Very poor diversification

The 3 months correlation between Concepcion and PLDT is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Concepcion Industrial Corp and PLDT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc and Concepcion Industrial 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 Concepcion Industrial Corp 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 Concepcion Industrial i.e., Concepcion Industrial and PLDT go up and down completely randomly.

Pair Corralation between Concepcion Industrial and PLDT

Assuming the 90 days trading horizon Concepcion Industrial Corp is expected to under-perform the PLDT. But the stock apears to be less risky and, when comparing its historical volatility, Concepcion Industrial Corp is 1.36 times less risky than PLDT. The stock trades about -0.18 of its potential returns per unit of risk. The PLDT Inc is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  135,500  in PLDT Inc on October 9, 2024 and sell it today you would lose (2,500) from holding PLDT Inc or give up 1.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	87.5%
Values	Daily Returns

Concepcion Industrial Corp  vs.  PLDT Inc

Concepcion Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Concepcion Industrial and PLDT

The main advantage of trading using opposite Concepcion Industrial and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Concepcion Industrial 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 Concepcion Industrial Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.