Correlation Between PLDT and Basic Energy

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

By analyzing existing cross correlation between PLDT Inc and Basic Energy Corp, you can compare the effects of market volatilities on PLDT and Basic Energy 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 Basic Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLDT and Basic Energy.

Diversification Opportunities for PLDT and Basic Energy

-0.4

Correlation Coefficient

PLDT  Basic Energy

Very good diversification

The 3 months correlation between PLDT and Basic is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc and Basic Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Energy 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 Basic Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Energy Corp has no effect on the direction of PLDT i.e., PLDT and Basic Energy go up and down completely randomly.

Pair Corralation between PLDT and Basic Energy

Assuming the 90 days trading horizon PLDT Inc is expected to generate 0.27 times more return on investment than Basic Energy. However, PLDT Inc is 3.76 times less risky than Basic Energy. It trades about -0.02 of its potential returns per unit of risk. Basic Energy Corp is currently generating about -0.01 per unit of risk. If you would invest  128,000  in PLDT Inc on April 22, 2025 and sell it today you would lose (2,900) from holding PLDT Inc or give up 2.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PLDT Inc  vs.  Basic Energy Corp

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.

Basic Energy Corp

Risk-Adjusted Performance

Weak

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

Pair Trading with PLDT and Basic Energy

The main advantage of trading using opposite PLDT and Basic Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLDT position performs unexpectedly, Basic Energy 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 Basic Energy will offset losses from the drop in Basic Energy's long position.

The idea behind PLDT Inc and Basic Energy Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.