Correlation Between PLDT and Intouch Holdings

Can any of the company-specific risk be diversified away by investing in both PLDT and Intouch Holdings 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 Intouch Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PLDT Inc and Intouch Holdings Public, you can compare the effects of market volatilities on PLDT and Intouch Holdings 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 Intouch Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLDT and Intouch Holdings.

Diversification Opportunities for PLDT and Intouch Holdings

-0.11

Correlation Coefficient

PLDT  Intouch Holdings

Good diversification

The 3 months correlation between PLDT and Intouch is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc and Intouch Holdings Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intouch Holdings Public 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 are associated (or correlated) with Intouch Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intouch Holdings Public has no effect on the direction of PLDT i.e., PLDT and Intouch Holdings go up and down completely randomly.

Pair Corralation between PLDT and Intouch Holdings

Assuming the 90 days horizon PLDT Inc is expected to generate 0.73 times more return on investment than Intouch Holdings. However, PLDT Inc is 1.37 times less risky than Intouch Holdings. It trades about 0.01 of its potential returns per unit of risk. Intouch Holdings Public is currently generating about -0.09 per unit of risk. If you would invest  1,950  in PLDT Inc on December 29, 2024 and sell it today you would earn a total of  10.00  from holding PLDT Inc or generate 0.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

PLDT Inc  vs.  Intouch Holdings Public

PLDT Inc

Risk-Adjusted Performance

Weak

Over the last 90 days PLDT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PLDT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Intouch Holdings Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intouch Holdings Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PLDT and Intouch Holdings

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

The idea behind PLDT Inc and Intouch Holdings Public 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.