Correlation Between PLDT and Consolidated Communications

Can any of the company-specific risk be diversified away by investing in both PLDT and Consolidated Communications 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 Consolidated Communications 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 Consolidated Communications, you can compare the effects of market volatilities on PLDT and Consolidated Communications 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 Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLDT and Consolidated Communications.

Diversification Opportunities for PLDT and Consolidated Communications

-0.56

Correlation Coefficient

PLDT  Consolidated Communications

Excellent diversification

The 3 months correlation between PLDT and Consolidated is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and Consolidated Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of PLDT i.e., PLDT and Consolidated Communications go up and down completely randomly.

Pair Corralation between PLDT and Consolidated Communications

Considering the 90-day investment horizon PLDT Inc ADR is expected to under-perform the Consolidated Communications. In addition to that, PLDT is 3.52 times more volatile than Consolidated Communications. It trades about -0.05 of its total potential returns per unit of risk. Consolidated Communications is currently generating about 0.15 per unit of volatility. If you would invest  440.00  in Consolidated Communications on October 1, 2024 and sell it today you would earn a total of  32.00  from holding Consolidated Communications or generate 7.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

PLDT Inc ADR  vs.  Consolidated Communications

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.

Consolidated Communications

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Communications are ranked lower than 8 (%) 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 current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PLDT and Consolidated Communications

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

The idea behind PLDT Inc ADR and Consolidated Communications 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.