Correlation Between PLDT and BDO Unibank
Can any of the company-specific risk be diversified away by investing in both PLDT and BDO Unibank 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 BDO Unibank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLDT Inc and BDO Unibank, you can compare the effects of market volatilities on PLDT and BDO Unibank 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 BDO Unibank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLDT and BDO Unibank.
Diversification Opportunities for PLDT and BDO Unibank
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PLDT and BDO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc and BDO Unibank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDO Unibank 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 BDO Unibank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BDO Unibank has no effect on the direction of PLDT i.e., PLDT and BDO Unibank go up and down completely randomly.
Pair Corralation between PLDT and BDO Unibank
Assuming the 90 days trading horizon PLDT Inc is expected to under-perform the BDO Unibank. But the stock apears to be less risky and, when comparing its historical volatility, PLDT Inc is 1.32 times less risky than BDO Unibank. The stock trades about -0.24 of its potential returns per unit of risk. The BDO Unibank is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 15,280 in BDO Unibank on September 1, 2024 and sell it today you would earn a total of 170.00 from holding BDO Unibank or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
PLDT Inc vs. BDO Unibank
Performance |
| Timeline |
| PLDT Inc |
| BDO Unibank |
PLDT and BDO Unibank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLDT and BDO Unibank
The main advantage of trading using opposite PLDT and BDO Unibank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLDT position performs unexpectedly, BDO Unibank 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 BDO Unibank will offset losses from the drop in BDO Unibank's long position.| PLDT vs. Philex Mining Corp | PLDT vs. Semirara Mining Corp | PLDT vs. Philippine Savings Bank | PLDT vs. SM Investments Corp |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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