Correlation Between Globe Telecom and PLDT

Can any of the company-specific risk be diversified away by investing in both Globe Telecom 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 Globe Telecom and PLDT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Globe Telecom and PLDT Inc, you can compare the effects of market volatilities on Globe Telecom 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 Globe Telecom with a short position of PLDT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Telecom and PLDT.

Diversification Opportunities for Globe Telecom and PLDT

0.7

Correlation Coefficient

Globe Telecom  PLDT

Poor diversification

The 3 months correlation between Globe and PLDT is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Globe Telecom and PLDT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc and Globe Telecom 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 Globe Telecom 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 Globe Telecom i.e., Globe Telecom and PLDT go up and down completely randomly.

Pair Corralation between Globe Telecom and PLDT

Assuming the 90 days trading horizon Globe Telecom is expected to under-perform the PLDT. In addition to that, Globe Telecom is 1.14 times more volatile than PLDT Inc. It trades about -0.2 of its total potential returns per unit of risk. PLDT Inc is currently generating about -0.04 per unit of volatility. If you would invest  132,900  in PLDT Inc on April 24, 2025 and sell it today you would lose (4,200) from holding PLDT Inc or give up 3.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Globe Telecom  vs.  PLDT Inc

Globe Telecom

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globe Telecom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

PLDT Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days PLDT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, PLDT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Globe Telecom and PLDT

The main advantage of trading using opposite Globe Telecom and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Telecom 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 Globe Telecom 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.