Correlation Between PLDT and Century Pacific

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

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

Diversification Opportunities for PLDT and Century Pacific

-0.53

Correlation Coefficient

PLDT  Century Pacific

Excellent diversification

The 3 months correlation between PLDT and Century is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc and Century Pacific Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Pacific Food 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 Century Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Pacific Food has no effect on the direction of PLDT i.e., PLDT and Century Pacific go up and down completely randomly.

Pair Corralation between PLDT and Century Pacific

Assuming the 90 days trading horizon PLDT Inc is expected to generate 0.51 times more return on investment than Century Pacific. However, PLDT Inc is 1.97 times less risky than Century Pacific. It trades about 0.03 of its potential returns per unit of risk. Century Pacific Food is currently generating about -0.05 per unit of risk. If you would invest  125,433  in PLDT Inc on December 30, 2024 and sell it today you would earn a total of  2,967  from holding PLDT Inc or generate 2.37% return on investment over 90 days.

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

PLDT Inc  vs.  Century Pacific Food

PLDT Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PLDT Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PLDT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Century Pacific Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Century Pacific Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PLDT and Century Pacific

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

The idea behind PLDT Inc and Century Pacific Food 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.