Correlation Between Rapid Micro and PLDT

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

By analyzing existing cross correlation between Rapid Micro Biosystems and PLDT Inc ADR, you can compare the effects of market volatilities on Rapid Micro and PLDT 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 Rapid Micro with a short position of PLDT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rapid Micro and PLDT.

Diversification Opportunities for Rapid Micro and PLDT

-0.33

Correlation Coefficient

Rapid Micro  PLDT

Very good diversification

The 3 months correlation between Rapid and PLDT is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Rapid Micro Biosystems and PLDT Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc ADR and Rapid Micro 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 Rapid Micro Biosystems are associated (or correlated) with PLDT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLDT Inc ADR has no effect on the direction of Rapid Micro i.e., Rapid Micro and PLDT go up and down completely randomly.

Pair Corralation between Rapid Micro and PLDT

Given the investment horizon of 90 days Rapid Micro Biosystems is expected to generate 5.01 times more return on investment than PLDT. However, Rapid Micro is 5.01 times more volatile than PLDT Inc ADR. It trades about 0.35 of its potential returns per unit of risk. PLDT Inc ADR is currently generating about 0.25 per unit of risk. If you would invest  91.00  in Rapid Micro Biosystems on October 22, 2024 and sell it today you would earn a total of  32.00  from holding Rapid Micro Biosystems or generate 35.16% return on investment over 90 days.

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

Rapid Micro Biosystems  vs.  PLDT Inc ADR

Rapid Micro Biosystems

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rapid Micro Biosystems are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Rapid Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with Rapid Micro and PLDT

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

The idea behind Rapid Micro Biosystems and PLDT Inc ADR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.