Correlation Between PLDT and Granite Construction
Can any of the company-specific risk be diversified away by investing in both PLDT and Granite Construction 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 Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLDT Inc and Granite Construction, you can compare the effects of market volatilities on PLDT and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLDT and Granite Construction.
Diversification Opportunities for PLDT and Granite Construction
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PLDT and Granite is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 are associated (or correlated) with Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of PLDT i.e., PLDT and Granite Construction go up and down completely randomly.
Pair Corralation between PLDT and Granite Construction
Assuming the 90 days horizon PLDT is expected to generate 8.4 times less return on investment than Granite Construction. But when comparing it to its historical volatility, PLDT Inc is 1.15 times less risky than Granite Construction. It trades about 0.01 of its potential returns per unit of risk. Granite Construction is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,815 in Granite Construction on October 25, 2024 and sell it today you would earn a total of 5,035 from holding Granite Construction or generate 131.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
PLDT Inc vs. Granite Construction
Performance |
| Timeline |
| PLDT Inc |
| Granite Construction |
PLDT and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLDT and Granite Construction
The main advantage of trading using opposite PLDT and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLDT position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction's long position.| PLDT vs. Granite Construction | PLDT vs. Tokyu Construction Co | PLDT vs. Meiko Electronics Co | PLDT vs. KIMBALL ELECTRONICS |
| Granite Construction vs. Lery Seafood Group | Granite Construction vs. INDOFOOD AGRI RES | Granite Construction vs. Japan Tobacco | Granite Construction vs. COFCO Joycome Foods |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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