Correlation Between PLDT and BCE
Can any of the company-specific risk be diversified away by investing in both PLDT and BCE 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 BCE 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 BCE Inc, you can compare the effects of market volatilities on PLDT and BCE 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 BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLDT and BCE.
Diversification Opportunities for PLDT and BCE
Excellent diversification
The 3 months correlation between PLDT and BCE is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc 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 BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of PLDT i.e., PLDT and BCE go up and down completely randomly.
Pair Corralation between PLDT and BCE
Considering the 90-day investment horizon PLDT Inc ADR is expected to generate 1.66 times more return on investment than BCE. However, PLDT is 1.66 times more volatile than BCE Inc. It trades about 0.04 of its potential returns per unit of risk. BCE Inc is currently generating about -0.11 per unit of risk. If you would invest 1,992 in PLDT Inc ADR on January 26, 2024 and sell it today you would earn a total of 340.00 from holding PLDT Inc ADR or generate 17.07% 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. BCE Inc
Performance |
| Timeline |
| PLDT Inc ADR |
| BCE Inc |
PLDT and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLDT and BCE
The main advantage of trading using opposite PLDT and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLDT position performs unexpectedly, BCE 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 BCE will offset losses from the drop in BCE's long position.| PLDT vs. KT Corporation | PLDT vs. Telefonica Brasil SA | PLDT vs. Orange SA ADR | PLDT vs. TIM Participacoes SA |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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