Correlation Between PLDT and Liberty Broadband

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

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

Diversification Opportunities for PLDT and Liberty Broadband

0.22

Correlation Coefficient

PLDT  Liberty Broadband

Modest diversification

The 3 months correlation between PLDT and Liberty is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and Liberty Broadband Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband 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 ADR are associated (or correlated) with Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband Corp has no effect on the direction of PLDT i.e., PLDT and Liberty Broadband go up and down completely randomly.

Pair Corralation between PLDT and Liberty Broadband

Considering the 90-day investment horizon PLDT Inc ADR is expected to generate 2.09 times more return on investment than Liberty Broadband. However, PLDT is 2.09 times more volatile than Liberty Broadband Corp. It trades about 0.08 of its potential returns per unit of risk. Liberty Broadband Corp is currently generating about -0.01 per unit of risk. If you would invest  2,186  in PLDT Inc ADR on February 3, 2025 and sell it today you would earn a total of  175.00  from holding PLDT Inc ADR or generate 8.01% return on investment over 90 days.

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

PLDT Inc ADR  vs.  Liberty Broadband Corp

PLDT Inc ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PLDT Inc ADR are ranked lower than 6 (%) 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 2025.

Liberty Broadband Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with PLDT and Liberty Broadband

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

The idea behind PLDT Inc ADR and Liberty Broadband 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.