Correlation Between Charter Communications and PLDT

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

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

Diversification Opportunities for Charter Communications and PLDT

-0.38

Correlation Coefficient

Charter Communications  PLDT

Very good diversification

The 3 months correlation between Charter and PLDT is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and PLDT Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLDT Inc ADR and Charter Communications 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 Charter Communications 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 ADR has no effect on the direction of Charter Communications i.e., Charter Communications and PLDT go up and down completely randomly.

Pair Corralation between Charter Communications and PLDT

Given the investment horizon of 90 days Charter Communications is expected to under-perform the PLDT. But the stock apears to be less risky and, when comparing its historical volatility, Charter Communications is 1.79 times less risky than PLDT. The stock trades about -0.09 of its potential returns per unit of risk. The PLDT Inc ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,204  in PLDT Inc ADR on February 4, 2024 and sell it today you would earn a total of  184.00  from holding PLDT Inc ADR or generate 8.35% return on investment over 90 days.

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

Charter Communications  vs.  PLDT Inc ADR

Charter Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charter Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

PLDT Inc ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PLDT Inc ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, PLDT may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Charter Communications and PLDT

The main advantage of trading using opposite Charter Communications and PLDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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 Charter Communications and PLDT Inc ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.