Correlation Between Consolidated Communications and PLDT

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

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

Diversification Opportunities for Consolidated Communications and PLDT

-0.54

Correlation Coefficient

Consolidated Communications  PLDT

Excellent diversification

The 3 months correlation between Consolidated and PLDT is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Communications 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 Consolidated Communications 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 Consolidated Communications 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 Consolidated Communications i.e., Consolidated Communications and PLDT go up and down completely randomly.

Pair Corralation between Consolidated Communications and PLDT

Given the investment horizon of 90 days Consolidated Communications is expected to generate 0.19 times more return on investment than PLDT. However, Consolidated Communications is 5.23 times less risky than PLDT. It trades about 0.12 of its potential returns per unit of risk. PLDT Inc ADR is currently generating about -0.22 per unit of risk. If you would invest  463.00  in Consolidated Communications on September 22, 2024 and sell it today you would earn a total of  3.00  from holding Consolidated Communications or generate 0.65% return on investment over 90 days.

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

Consolidated Communications  vs.  PLDT Inc ADR

Consolidated Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Consolidated Communications is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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 Consolidated Communications and PLDT

The main advantage of trading using opposite Consolidated Communications and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Communications 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 Consolidated Communications 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.