Correlation Between PLDT and Aboitiz Equity

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

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

Diversification Opportunities for PLDT and Aboitiz Equity

0.91

Correlation Coefficient

PLDT  Aboitiz Equity

Almost no diversification

The 3 months correlation between PLDT and Aboitiz is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc and Aboitiz Equity Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aboitiz Equity Ventures 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 Aboitiz Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aboitiz Equity Ventures has no effect on the direction of PLDT i.e., PLDT and Aboitiz Equity go up and down completely randomly.

Pair Corralation between PLDT and Aboitiz Equity

Assuming the 90 days trading horizon PLDT Inc is expected to under-perform the Aboitiz Equity. In addition to that, PLDT is 1.09 times more volatile than Aboitiz Equity Ventures. It trades about -0.17 of its total potential returns per unit of risk. Aboitiz Equity Ventures is currently generating about -0.06 per unit of volatility. If you would invest  3,385  in Aboitiz Equity Ventures on September 23, 2024 and sell it today you would lose (85.00) from holding Aboitiz Equity Ventures or give up 2.51% of portfolio value over 90 days.

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

PLDT Inc  vs.  Aboitiz Equity Ventures

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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Aboitiz Equity Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aboitiz Equity Ventures 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with PLDT and Aboitiz Equity

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

The idea behind PLDT Inc and Aboitiz Equity Ventures 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.