Correlation Between PLDT and Metro Retail
Can any of the company-specific risk be diversified away by investing in both PLDT and Metro Retail 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 Metro Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLDT Inc and Metro Retail Stores, you can compare the effects of market volatilities on PLDT and Metro Retail 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 Metro Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLDT and Metro Retail.
Diversification Opportunities for PLDT and Metro Retail
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PLDT and Metro is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc and Metro Retail Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Retail Stores 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 Metro Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Retail Stores has no effect on the direction of PLDT i.e., PLDT and Metro Retail go up and down completely randomly.
Pair Corralation between PLDT and Metro Retail
Assuming the 90 days trading horizon PLDT Inc is expected to generate 0.97 times more return on investment than Metro Retail. However, PLDT Inc is 1.03 times less risky than Metro Retail. It trades about 0.03 of its potential returns per unit of risk. Metro Retail Stores is currently generating about 0.0 per unit of risk. If you would invest 107,345 in PLDT Inc on September 13, 2024 and sell it today you would earn a total of 22,655 from holding PLDT Inc or generate 21.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.67% |
| Values | Daily Returns |
PLDT Inc vs. Metro Retail Stores
Performance |
| Timeline |
| PLDT Inc |
| Metro Retail Stores |
PLDT and Metro Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLDT and Metro Retail
The main advantage of trading using opposite PLDT and Metro Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLDT position performs unexpectedly, Metro Retail 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 Metro Retail will offset losses from the drop in Metro Retail's long position.| PLDT vs. Metro Retail Stores | PLDT vs. COL Financial Group | PLDT vs. Robinsons Retail Holdings | PLDT vs. National Reinsurance |
| Metro Retail vs. Asia United Bank | Metro Retail vs. East West Banking | Metro Retail vs. Converge Information Communications | Metro Retail vs. Premiere Entertainment |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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