Correlation Between Union Bank and PLDT

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

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

Diversification Opportunities for Union Bank and PLDT

-0.15

Correlation Coefficient

Union Bank  PLDT

Good diversification

The 3 months correlation between Union and PLDT is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of and PLDT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc and Union 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 Union Bank of 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 Union Bank i.e., Union Bank and PLDT go up and down completely randomly.

Pair Corralation between Union Bank and PLDT

Assuming the 90 days trading horizon Union Bank of is expected to under-perform the PLDT. In addition to that, Union Bank is 1.14 times more volatile than PLDT Inc. It trades about -0.02 of its total potential returns per unit of risk. PLDT Inc is currently generating about 0.03 per unit of volatility. If you would invest  125,433  in PLDT Inc on December 29, 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	Insignificant
Accuracy	98.39%
Values	Daily Returns

Union Bank of  vs.  PLDT Inc

Union Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Union Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Union Bank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Union Bank and PLDT

The main advantage of trading using opposite Union Bank and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union 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 Union Bank of 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.