Correlation Between PLDT and Security Bank
Can any of the company-specific risk be diversified away by investing in both PLDT and Security Bank 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 Security Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLDT Inc and Security Bank Corp, you can compare the effects of market volatilities on PLDT and Security Bank 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 Security Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLDT and Security Bank.
Diversification Opportunities for PLDT and Security Bank
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PLDT and Security is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc and Security Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Bank Corp 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 Security Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Bank Corp has no effect on the direction of PLDT i.e., PLDT and Security Bank go up and down completely randomly.
Pair Corralation between PLDT and Security Bank
Assuming the 90 days trading horizon PLDT Inc is expected to generate 0.86 times more return on investment than Security Bank. However, PLDT Inc is 1.16 times less risky than Security Bank. It trades about 0.03 of its potential returns per unit of risk. Security Bank Corp is currently generating about 0.02 per unit of risk. If you would invest 121,233 in PLDT Inc on November 4, 2024 and sell it today you would earn a total of 12,767 from holding PLDT Inc or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLDT Inc vs. Security Bank Corp
Performance |
| Timeline |
| PLDT Inc |
| Security Bank Corp |
PLDT and Security Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLDT and Security Bank
The main advantage of trading using opposite PLDT and Security Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLDT position performs unexpectedly, Security Bank 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 Security Bank will offset losses from the drop in Security Bank's long position.| PLDT vs. Philex Mining Corp | PLDT vs. Figaro Coffee Group | PLDT vs. Top Frontier Investment | PLDT vs. Semirara Mining Corp |
| Security Bank vs. Crown Asia Chemicals | Security Bank vs. Robinsons Retail Holdings | Security Bank vs. Philippine Business Bank | Security Bank vs. Globe Telecom |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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