Correlation Between PLDT and Converge Information

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

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

Diversification Opportunities for PLDT and Converge Information

0.26

Correlation Coefficient

PLDT  Converge Information

Modest diversification

The 3 months correlation between PLDT and Converge is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information 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 Converge Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Information has no effect on the direction of PLDT i.e., PLDT and Converge Information go up and down completely randomly.

Pair Corralation between PLDT and Converge Information

Assuming the 90 days trading horizon PLDT Inc is expected to under-perform the Converge Information. But the stock apears to be less risky and, when comparing its historical volatility, PLDT Inc is 1.49 times less risky than Converge Information. The stock trades about -0.08 of its potential returns per unit of risk. The Converge Information Communications is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,514  in Converge Information Communications on September 5, 2024 and sell it today you would earn a total of  136.00  from holding Converge Information Communications or generate 8.98% return on investment over 90 days.

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

PLDT Inc  vs.  Converge Information Communica

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 latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Converge Information

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Converge Information Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Converge Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PLDT and Converge Information

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

The idea behind PLDT Inc and Converge Information Communications 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.