Correlation Between PLDT and Orange SA

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

Diversification Opportunities for PLDT and Orange SA

0.53

Correlation Coefficient

PLDT  Orange SA

Very weak diversification

The 3 months correlation between PLDT and Orange is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA 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 Orange SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange SA has no effect on the direction of PLDT i.e., PLDT and Orange SA go up and down completely randomly.

Pair Corralation between PLDT and Orange SA

Considering the 90-day investment horizon PLDT Inc ADR is expected to under-perform the Orange SA. But the stock apears to be less risky and, when comparing its historical volatility, PLDT Inc ADR is 3.01 times less risky than Orange SA. The stock trades about -0.18 of its potential returns per unit of risk. The Orange SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,130  in Orange SA on September 13, 2024 and sell it today you would lose (111.00) from holding Orange SA or give up 9.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

PLDT Inc ADR  vs.  Orange SA

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.

Orange SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orange SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Orange SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PLDT and Orange SA

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

The idea behind PLDT Inc ADR and Orange SA 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.