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
Very weak diversification
The 3 months correlation between PLDT and Orange is 0.41. 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 is expected to generate 2.22 times less return on investment than Orange SA. But when comparing it to its historical volatility, PLDT Inc ADR is 1.97 times less risky than Orange SA. It trades about 0.02 of its potential returns per unit of risk. Orange SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,046 in Orange SA on August 31, 2024 and sell it today you would earn a total of 64.00 from holding Orange SA or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 66.58% |
| Values | Daily Returns |
PLDT Inc ADR vs. Orange SA
Performance |
| Timeline |
| PLDT Inc ADR |
| Orange SA |
PLDT and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
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.| PLDT vs. RLJ Lodging Trust | PLDT vs. Aquagold International | PLDT vs. Stepstone Group | PLDT vs. Morningstar Unconstrained Allocation |
| Orange SA vs. Liberty Broadband Srs | Orange SA vs. PLDT Inc ADR | Orange SA vs. TIM Participacoes SA | Orange SA vs. Telefonica Brasil 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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