Correlation Between PLDT and Qwest Corp

Can any of the company-specific risk be diversified away by investing in both PLDT and Qwest Corp 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 Qwest Corp 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 Qwest Corp NT, you can compare the effects of market volatilities on PLDT and Qwest Corp 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 Qwest Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLDT and Qwest Corp.

Diversification Opportunities for PLDT and Qwest Corp

0.57

Correlation Coefficient

PLDT  Qwest Corp

Very weak diversification

The 3 months correlation between PLDT and Qwest is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and Qwest Corp NT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qwest Corp NT 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 Qwest Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qwest Corp NT has no effect on the direction of PLDT i.e., PLDT and Qwest Corp go up and down completely randomly.

Pair Corralation between PLDT and Qwest Corp

Considering the 90-day investment horizon PLDT is expected to generate 4.57 times less return on investment than Qwest Corp. In addition to that, PLDT is 1.32 times more volatile than Qwest Corp NT. It trades about 0.01 of its total potential returns per unit of risk. Qwest Corp NT is currently generating about 0.07 per unit of volatility. If you would invest  1,712  in Qwest Corp NT on December 27, 2024 and sell it today you would earn a total of  74.00  from holding Qwest Corp NT or generate 4.32% return on investment over 90 days.

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

PLDT Inc ADR  vs.  Qwest Corp NT

PLDT Inc ADR

Risk-Adjusted Performance

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 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.

Qwest Corp NT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Qwest Corp NT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Qwest Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PLDT and Qwest Corp

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

The idea behind PLDT Inc ADR and Qwest Corp NT 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.