Correlation Between PLDT and TIM Participacoes

Can any of the company-specific risk be diversified away by investing in both PLDT and TIM Participacoes 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 TIM Participacoes 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 TIM Participacoes SA, you can compare the effects of market volatilities on PLDT and TIM Participacoes 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 TIM Participacoes. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLDT and TIM Participacoes.

Diversification Opportunities for PLDT and TIM Participacoes

-0.63

Correlation Coefficient

PLDT  TIM Participacoes

Excellent diversification

The 3 months correlation between PLDT and TIM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and TIM Participacoes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIM Participacoes 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 TIM Participacoes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIM Participacoes has no effect on the direction of PLDT i.e., PLDT and TIM Participacoes go up and down completely randomly.

Pair Corralation between PLDT and TIM Participacoes

Considering the 90-day investment horizon PLDT Inc ADR is expected to under-perform the TIM Participacoes. But the stock apears to be less risky and, when comparing its historical volatility, PLDT Inc ADR is 1.53 times less risky than TIM Participacoes. The stock trades about -0.02 of its potential returns per unit of risk. The TIM Participacoes SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,719  in TIM Participacoes SA on May 7, 2025 and sell it today you would earn a total of  244.00  from holding TIM Participacoes SA or generate 14.19% return on investment over 90 days.

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

PLDT Inc ADR  vs.  TIM Participacoes SA

PLDT Inc ADR

Risk-Adjusted Performance

Weakest

Over the last 90 days PLDT Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, PLDT is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

TIM Participacoes

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in TIM Participacoes SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, TIM Participacoes sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLDT and TIM Participacoes

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

The idea behind PLDT Inc ADR and TIM Participacoes SA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.