Correlation Between PLDT and SK Telecom

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

Diversification Opportunities for PLDT and SK Telecom

-0.07

Correlation Coefficient

PLDT  SK Telecom

Good diversification

The 3 months correlation between PLDT and SKM is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom 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 SK Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Telecom has no effect on the direction of PLDT i.e., PLDT and SK Telecom go up and down completely randomly.

Pair Corralation between PLDT and SK Telecom

Considering the 90-day investment horizon PLDT Inc ADR is expected to generate 0.91 times more return on investment than SK Telecom. However, PLDT Inc ADR is 1.1 times less risky than SK Telecom. It trades about 0.07 of its potential returns per unit of risk. SK Telecom Co is currently generating about -0.02 per unit of risk. If you would invest  2,237  in PLDT Inc ADR on November 19, 2024 and sell it today you would earn a total of  103.00  from holding PLDT Inc ADR or generate 4.6% 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.  SK Telecom Co

PLDT Inc ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PLDT Inc ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

SK Telecom

Risk-Adjusted Performance

Very Weak

Over the last 90 days SK Telecom Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, SK Telecom is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PLDT and SK Telecom

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

The idea behind PLDT Inc ADR and SK Telecom Co 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.