Correlation Between IDT and PLDT

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

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

Diversification Opportunities for IDT and PLDT

0.29

Correlation Coefficient

IDT  PLDT

Modest diversification

The 3 months correlation between IDT and PLDT is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding IDT Corp. 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 IDT 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 IDT Corporation 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 IDT i.e., IDT and PLDT go up and down completely randomly.

Pair Corralation between IDT and PLDT

Considering the 90-day investment horizon IDT Corporation is expected to generate 1.45 times more return on investment than PLDT. However, IDT is 1.45 times more volatile than PLDT Inc ADR. It trades about 0.07 of its potential returns per unit of risk. PLDT Inc ADR is currently generating about 0.02 per unit of risk. If you would invest  4,814  in IDT Corporation on December 26, 2024 and sell it today you would earn a total of  368.00  from holding IDT Corporation or generate 7.64% return on investment over 90 days.

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

IDT Corp.  vs.  PLDT Inc ADR

IDT Corporation

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IDT Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental indicators, IDT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PLDT Inc ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PLDT Inc ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, PLDT is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IDT and PLDT

The main advantage of trading using opposite IDT and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDT 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 IDT Corporation 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.