Correlation Between X FAB and PLDT
Can any of the company-specific risk be diversified away by investing in both X FAB 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 X FAB and PLDT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and PLDT Inc, you can compare the effects of market volatilities on X FAB 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 X FAB with a short position of PLDT. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and PLDT.
Diversification Opportunities for X FAB and PLDT
Very poor diversification
The 3 months correlation between XFB and PLDT is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and PLDT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc and X FAB 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 X FAB Silicon Foundries 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 has no effect on the direction of X FAB i.e., X FAB and PLDT go up and down completely randomly.
Pair Corralation between X FAB and PLDT
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.86 times more return on investment than PLDT. However, X FAB is 1.86 times more volatile than PLDT Inc. It trades about -0.03 of its potential returns per unit of risk. PLDT Inc is currently generating about -0.14 per unit of risk. If you would invest 537.00 in X FAB Silicon Foundries on September 13, 2024 and sell it today you would lose (36.00) from holding X FAB Silicon Foundries or give up 6.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. PLDT Inc
Performance |
| Timeline |
| X FAB Silicon |
| PLDT Inc |
X FAB and PLDT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and PLDT
The main advantage of trading using opposite X FAB and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB 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.The idea behind X FAB Silicon Foundries and PLDT Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| PLDT vs. CyberArk Software | PLDT vs. Constellation Software | PLDT vs. X FAB Silicon Foundries | PLDT vs. Taiwan Semiconductor Manufacturing |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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