Correlation Between PLDT and Cable One

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

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

Diversification Opportunities for PLDT and Cable One

-0.78

Correlation Coefficient

PLDT  Cable One

Pay attention - limited upside

The 3 months correlation between PLDT and Cable is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One 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 ADR are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of PLDT i.e., PLDT and Cable One go up and down completely randomly.

Pair Corralation between PLDT and Cable One

Considering the 90-day investment horizon PLDT Inc ADR is expected to under-perform the Cable One. But the stock apears to be less risky and, when comparing its historical volatility, PLDT Inc ADR is 2.21 times less risky than Cable One. The stock trades about -0.02 of its potential returns per unit of risk. The Cable One is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  35,422  in Cable One on September 22, 2024 and sell it today you would earn a total of  1,484  from holding Cable One or generate 4.19% return on investment over 90 days.

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

PLDT Inc ADR  vs.  Cable One

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.

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.

Pair Trading with PLDT and Cable One

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

The idea behind PLDT Inc ADR and Cable One 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.