Correlation Between Nippon Telegraph and PLDT

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

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

Diversification Opportunities for Nippon Telegraph and PLDT

0.13

Correlation Coefficient

Nippon Telegraph  PLDT

Average diversification

The 3 months correlation between Nippon and PLDT is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Telegraph and 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 Nippon Telegraph 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 Nippon Telegraph and 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 Nippon Telegraph i.e., Nippon Telegraph and PLDT go up and down completely randomly.

Pair Corralation between Nippon Telegraph and PLDT

Assuming the 90 days horizon Nippon Telegraph and is expected to under-perform the PLDT. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nippon Telegraph and is 1.89 times less risky than PLDT. The pink sheet trades about -0.04 of its potential returns per unit of risk. The PLDT Inc ADR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,303  in PLDT Inc ADR on October 11, 2024 and sell it today you would lose (37.00) from holding PLDT Inc ADR or give up 1.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	3.03%
Values	Daily Returns

Nippon Telegraph and  vs.  PLDT Inc ADR

Nippon Telegraph

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Telegraph and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nippon Telegraph is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 Nippon Telegraph and PLDT

The main advantage of trading using opposite Nippon Telegraph and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Telegraph 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 Nippon Telegraph and 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 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.