Correlation Between Cable One and PLDT

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

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

Diversification Opportunities for Cable One and PLDT

-0.78

Correlation Coefficient

Cable One  PLDT

Pay attention - limited upside

The 3 months correlation between Cable and PLDT is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and PLDT Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc ADR and Cable One 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 Cable One 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 ADR has no effect on the direction of Cable One i.e., Cable One and PLDT go up and down completely randomly.

Pair Corralation between Cable One and PLDT

Given the investment horizon of 90 days Cable One is expected to generate 2.04 times more return on investment than PLDT. However, Cable One is 2.04 times more volatile than PLDT Inc ADR. It trades about 0.06 of its potential returns per unit of risk. PLDT Inc ADR is currently generating about -0.27 per unit of risk. If you would invest  33,930  in Cable One on September 22, 2024 and sell it today you would earn a total of  2,976  from holding Cable One or generate 8.77% return on investment over 90 days.

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

Cable One  vs.  PLDT Inc ADR

Cable One

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cable One are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Cable One may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PLDT Inc ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLDT Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Cable One and PLDT

The main advantage of trading using opposite Cable One and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One 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 Cable One and PLDT Inc ADR 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.