Correlation Between PLDT and Cirtek Holdings

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

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

Diversification Opportunities for PLDT and Cirtek Holdings

-0.47

Correlation Coefficient

PLDT  Cirtek Holdings

Very good diversification

The 3 months correlation between PLDT and Cirtek is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc and Cirtek Holdings Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirtek Holdings Phil 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 Cirtek Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirtek Holdings Phil has no effect on the direction of PLDT i.e., PLDT and Cirtek Holdings go up and down completely randomly.

Pair Corralation between PLDT and Cirtek Holdings

Assuming the 90 days trading horizon PLDT Inc is expected to generate 0.22 times more return on investment than Cirtek Holdings. However, PLDT Inc is 4.56 times less risky than Cirtek Holdings. It trades about -0.04 of its potential returns per unit of risk. Cirtek Holdings Philippines is currently generating about -0.01 per unit of risk. 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 Against
Strength	Very Weak
Accuracy	91.8%
Values	Daily Returns

PLDT Inc  vs.  Cirtek Holdings Philippines

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.

Cirtek Holdings Phil

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cirtek Holdings Philippines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Cirtek Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PLDT and Cirtek Holdings

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

The idea behind PLDT Inc and Cirtek Holdings Philippines 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.