Correlation Between PLDT and Telephone

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

Diversification Opportunities for PLDT and Telephone

0.34

Correlation Coefficient

PLDT  Telephone

Weak diversification

The 3 months correlation between PLDT and Telephone is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and Telephone and Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telephone and Data 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 Telephone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telephone and Data has no effect on the direction of PLDT i.e., PLDT and Telephone go up and down completely randomly.

Pair Corralation between PLDT and Telephone

Considering the 90-day investment horizon PLDT Inc ADR is expected to generate 0.6 times more return on investment than Telephone. However, PLDT Inc ADR is 1.66 times less risky than Telephone. It trades about 0.08 of its potential returns per unit of risk. Telephone and Data is currently generating about 0.05 per unit of risk. If you would invest  2,143  in PLDT Inc ADR on December 22, 2024 and sell it today you would earn a total of  139.00  from holding PLDT Inc ADR or generate 6.49% return on investment over 90 days.

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

PLDT Inc ADR  vs.  Telephone and Data

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 6 (%) 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.

Telephone and Data

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telephone and Data are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, Telephone may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PLDT and Telephone

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

The idea behind PLDT Inc ADR and Telephone and Data 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.