Correlation Between PLDT and Lumen Technologies

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

Diversification Opportunities for PLDT and Lumen Technologies

-0.6

Correlation Coefficient

PLDT  Lumen Technologies

Excellent diversification

The 3 months correlation between PLDT and Lumen is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies 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 Lumen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies has no effect on the direction of PLDT i.e., PLDT and Lumen Technologies go up and down completely randomly.

Pair Corralation between PLDT and Lumen Technologies

Considering the 90-day investment horizon PLDT Inc ADR is expected to generate 0.33 times more return on investment than Lumen Technologies. However, PLDT Inc ADR is 3.02 times less risky than Lumen Technologies. It trades about 0.01 of its potential returns per unit of risk. Lumen Technologies is currently generating about -0.07 per unit of risk. If you would invest  2,207  in PLDT Inc ADR on December 27, 2024 and sell it today you would earn a total of  10.00  from holding PLDT Inc ADR or generate 0.45% return on investment over 90 days.

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

PLDT Inc ADR  vs.  Lumen Technologies

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.

Lumen Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lumen Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with PLDT and Lumen Technologies

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

The idea behind PLDT Inc ADR and Lumen Technologies 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.