Correlation Between Philippine Business and PLDT

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

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

Diversification Opportunities for Philippine Business and PLDT

-0.53

Correlation Coefficient

Philippine Business  PLDT

Excellent diversification

The 3 months correlation between Philippine and PLDT is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Business Bank and PLDT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc and Philippine Business 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 Philippine Business Bank 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 Philippine Business i.e., Philippine Business and PLDT go up and down completely randomly.

Pair Corralation between Philippine Business and PLDT

Assuming the 90 days trading horizon Philippine Business Bank is expected to generate 2.04 times more return on investment than PLDT. However, Philippine Business is 2.04 times more volatile than PLDT Inc. It trades about 0.08 of its potential returns per unit of risk. PLDT Inc is currently generating about -0.02 per unit of risk. If you would invest  770.00  in Philippine Business Bank on April 20, 2025 and sell it today you would earn a total of  74.00  from holding Philippine Business Bank or generate 9.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.71%
Values	Daily Returns

Philippine Business Bank  vs.  PLDT Inc

Philippine Business Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Philippine Business Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Philippine Business may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 Philippine Business and PLDT

The main advantage of trading using opposite Philippine Business and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Business 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 Philippine Business Bank 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.