Correlation Between Telefonica and PLDT
Can any of the company-specific risk be diversified away by investing in both Telefonica 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 Telefonica and PLDT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonica SA ADR and PLDT Inc ADR, you can compare the effects of market volatilities on Telefonica 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 Telefonica with a short position of PLDT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica and PLDT.
Diversification Opportunities for Telefonica and PLDT
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Telefonica and PLDT is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica SA ADR and PLDT Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc ADR and Telefonica 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 Telefonica SA ADR 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 ADR has no effect on the direction of Telefonica i.e., Telefonica and PLDT go up and down completely randomly.
Pair Corralation between Telefonica and PLDT
Considering the 90-day investment horizon Telefonica SA ADR is expected to generate 0.79 times more return on investment than PLDT. However, Telefonica SA ADR is 1.27 times less risky than PLDT. It trades about 0.04 of its potential returns per unit of risk. PLDT Inc ADR is currently generating about 0.03 per unit of risk. If you would invest 351.00 in Telefonica SA ADR on November 19, 2024 and sell it today you would earn a total of 77.00 from holding Telefonica SA ADR or generate 21.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonica SA ADR vs. PLDT Inc ADR
Performance |
| Timeline |
| Telefonica SA ADR |
| PLDT Inc ADR |
Telefonica and PLDT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica and PLDT
The main advantage of trading using opposite Telefonica and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica 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.| Telefonica vs. SK Telecom Co | Telefonica vs. America Movil SAB | Telefonica vs. KT Corporation | Telefonica vs. Telefonica Brasil SA |
| PLDT vs. KT Corporation | PLDT vs. Telefonica Brasil SA | PLDT vs. TIM Participacoes SA | PLDT vs. SK Telecom 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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