Correlation Between Security Bank and PLDT

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

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

Diversification Opportunities for Security Bank and PLDT

0.84

Correlation Coefficient

Security Bank  PLDT

Very poor diversification

The 3 months correlation between Security and PLDT is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Security Bank Corp and PLDT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc and Security Bank 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 Security Bank Corp 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 has no effect on the direction of Security Bank i.e., Security Bank and PLDT go up and down completely randomly.

Pair Corralation between Security Bank and PLDT

Assuming the 90 days trading horizon Security Bank Corp is expected to generate 1.08 times more return on investment than PLDT. However, Security Bank is 1.08 times more volatile than PLDT Inc. It trades about 0.05 of its potential returns per unit of risk. PLDT Inc is currently generating about 0.03 per unit of risk. If you would invest  7,095  in Security Bank Corp on October 9, 2024 and sell it today you would earn a total of  1,305  from holding Security Bank Corp or generate 18.39% return on investment over 90 days.

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

Security Bank Corp  vs.  PLDT Inc

Security Bank Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Security Bank Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Security Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

PLDT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLDT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Security Bank and PLDT

The main advantage of trading using opposite Security Bank and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security Bank 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 Security Bank Corp and PLDT Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.