Correlation Between Metro Retail and PLDT
Can any of the company-specific risk be diversified away by investing in both Metro Retail 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 Metro Retail and PLDT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Retail Stores and PLDT Inc, you can compare the effects of market volatilities on Metro Retail 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 Metro Retail with a short position of PLDT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Retail and PLDT.
Diversification Opportunities for Metro Retail and PLDT
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metro and PLDT is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Metro Retail Stores and PLDT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc and Metro Retail 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 Metro Retail Stores 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 has no effect on the direction of Metro Retail i.e., Metro Retail and PLDT go up and down completely randomly.
Pair Corralation between Metro Retail and PLDT
Assuming the 90 days trading horizon Metro Retail Stores is expected to generate 0.96 times more return on investment than PLDT. However, Metro Retail Stores is 1.05 times less risky than PLDT. It trades about 0.02 of its potential returns per unit of risk. PLDT Inc is currently generating about -0.05 per unit of risk. If you would invest 122.00 in Metro Retail Stores on December 4, 2024 and sell it today you would earn a total of 2.00 from holding Metro Retail Stores or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.35% |
| Values | Daily Returns |
Metro Retail Stores vs. PLDT Inc
Performance |
| Timeline |
| Metro Retail Stores |
| PLDT Inc |
Metro Retail and PLDT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Retail and PLDT
The main advantage of trading using opposite Metro Retail and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Retail 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.| Metro Retail vs. Asia United Bank | Metro Retail vs. Swift Foods | Metro Retail vs. Transpacific Broadband Group | Metro Retail vs. Jollibee Foods Corp |
| PLDT vs. Semirara Mining Corp | PLDT vs. Metro Retail Stores | PLDT vs. Converge Information Communications | PLDT vs. Philex Mining Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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