Correlation Between Grupo Televisa and PLDT

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

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

Diversification Opportunities for Grupo Televisa and PLDT

0.18

Correlation Coefficient

Grupo Televisa  PLDT

Average diversification

The 3 months correlation between Grupo and PLDT is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Televisa SAB 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 Grupo Televisa 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 Grupo Televisa SAB 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 Grupo Televisa i.e., Grupo Televisa and PLDT go up and down completely randomly.

Pair Corralation between Grupo Televisa and PLDT

Allowing for the 90-day total investment horizon Grupo Televisa SAB is expected to under-perform the PLDT. In addition to that, Grupo Televisa is 1.95 times more volatile than PLDT Inc ADR. It trades about -0.03 of its total potential returns per unit of risk. PLDT Inc ADR is currently generating about 0.01 per unit of volatility. If you would invest  2,126  in PLDT Inc ADR on August 31, 2024 and sell it today you would earn a total of  93.00  from holding PLDT Inc ADR or generate 4.37% return on investment over 90 days.

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

Grupo Televisa SAB  vs.  PLDT Inc ADR

Grupo Televisa SAB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Televisa SAB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish basic indicators, Grupo Televisa may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 sluggish performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Grupo Televisa and PLDT

The main advantage of trading using opposite Grupo Televisa and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Televisa 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 Grupo Televisa SAB 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .