Correlation Between PLDT and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both PLDT and Telecom Argentina 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 Telecom Argentina 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 Telecom Argentina SA, you can compare the effects of market volatilities on PLDT and Telecom Argentina 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 Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLDT and Telecom Argentina.
Diversification Opportunities for PLDT and Telecom Argentina
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PLDT and Telecom is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and Telecom Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina 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 Telecom Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Argentina has no effect on the direction of PLDT i.e., PLDT and Telecom Argentina go up and down completely randomly.
Pair Corralation between PLDT and Telecom Argentina
Considering the 90-day investment horizon PLDT Inc ADR is expected to under-perform the Telecom Argentina. But the stock apears to be less risky and, when comparing its historical volatility, PLDT Inc ADR is 2.79 times less risky than Telecom Argentina. The stock trades about -0.27 of its potential returns per unit of risk. The Telecom Argentina SA is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 865.00 in Telecom Argentina SA on August 26, 2024 and sell it today you would earn a total of 455.00 from holding Telecom Argentina SA or generate 52.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLDT Inc ADR vs. Telecom Argentina SA
Performance |
| Timeline |
| PLDT Inc ADR |
| Telecom Argentina |
PLDT and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLDT and Telecom Argentina
The main advantage of trading using opposite PLDT and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLDT position performs unexpectedly, Telecom Argentina 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 Telecom Argentina will offset losses from the drop in Telecom Argentina's long position.The idea behind PLDT Inc ADR and Telecom Argentina 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.| Telecom Argentina vs. Liberty Broadband Srs | Telecom Argentina vs. Ribbon Communications | Telecom Argentina vs. Liberty Broadband Srs | Telecom Argentina vs. Shenandoah Telecommunications Co |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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