Correlation Between PLDT and IDT

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

Diversification Opportunities for PLDT and IDT

-0.83

Correlation Coefficient

PLDT  IDT

Pay attention - limited upside

The 3 months correlation between PLDT and IDT is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and IDT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDT Corporation 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 IDT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDT Corporation has no effect on the direction of PLDT i.e., PLDT and IDT go up and down completely randomly.

Pair Corralation between PLDT and IDT

Considering the 90-day investment horizon PLDT Inc ADR is expected to under-perform the IDT. But the stock apears to be less risky and, when comparing its historical volatility, PLDT Inc ADR is 2.24 times less risky than IDT. The stock trades about -0.16 of its potential returns per unit of risk. The IDT Corporation is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,875  in IDT Corporation on September 3, 2024 and sell it today you would earn a total of  1,336  from holding IDT Corporation or generate 34.48% return on investment over 90 days.

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

PLDT Inc ADR  vs.  IDT Corp.

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 unfluctuating performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

IDT Corporation

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IDT Corporation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental indicators, IDT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLDT and IDT

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

The idea behind PLDT Inc ADR and IDT Corporation 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.