Correlation Between GT Capital and PLDT

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

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

Diversification Opportunities for GT Capital and PLDT

0.88

Correlation Coefficient

GT Capital  PLDT

Very poor diversification

The 3 months correlation between GTCAP and PLDT is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and PLDT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc and GT Capital 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 GT Capital Holdings 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 GT Capital i.e., GT Capital and PLDT go up and down completely randomly.

Pair Corralation between GT Capital and PLDT

Assuming the 90 days trading horizon GT Capital Holdings is expected to generate 1.03 times more return on investment than PLDT. However, GT Capital is 1.03 times more volatile than PLDT Inc. It trades about -0.09 of its potential returns per unit of risk. PLDT Inc is currently generating about -0.1 per unit of risk. If you would invest  72,200  in GT Capital Holdings on September 17, 2024 and sell it today you would lose (7,400) from holding GT Capital Holdings or give up 10.25% of portfolio value over 90 days.

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

GT Capital Holdings  vs.  PLDT Inc

GT Capital Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GT Capital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

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.

Pair Trading with GT Capital and PLDT

The main advantage of trading using opposite GT Capital and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GT Capital 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 GT Capital Holdings 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.