Correlation Between PLDT and Cogent Communications

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

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

Diversification Opportunities for PLDT and Cogent Communications

-0.08

Correlation Coefficient

PLDT  Cogent Communications

Good diversification

The 3 months correlation between PLDT and Cogent is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and Cogent Communications Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and PLDT 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 PLDT Inc ADR are associated (or correlated) with Cogent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Communications has no effect on the direction of PLDT i.e., PLDT and Cogent Communications go up and down completely randomly.

Pair Corralation between PLDT and Cogent Communications

Considering the 90-day investment horizon PLDT Inc ADR is expected to generate 0.66 times more return on investment than Cogent Communications. However, PLDT Inc ADR is 1.51 times less risky than Cogent Communications. It trades about 0.13 of its potential returns per unit of risk. Cogent Communications Group is currently generating about -0.05 per unit of risk. If you would invest  2,167  in PLDT Inc ADR on December 17, 2024 and sell it today you would earn a total of  212.00  from holding PLDT Inc ADR or generate 9.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PLDT Inc ADR  vs.  Cogent Communications Group

PLDT Inc ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLDT Inc ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, PLDT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cogent Communications

Risk-Adjusted Performance

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 fairly strong basic indicators, Cogent Communications is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with PLDT and Cogent Communications

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

The idea behind PLDT Inc ADR and Cogent Communications Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..