Correlation Between Filo Mining and High Coast

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

By analyzing existing cross correlation between Filo Mining Corp and High Coast Distillery, you can compare the effects of market volatilities on Filo Mining and High Coast 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 Filo Mining with a short position of High Coast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Filo Mining and High Coast.

Diversification Opportunities for Filo Mining and High Coast

0.61

Correlation Coefficient

Filo Mining  High Coast

Poor diversification

The 3 months correlation between Filo and High is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Filo Mining Corp and High Coast Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Coast Distillery and Filo Mining 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 Filo Mining Corp are associated (or correlated) with High Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Coast Distillery has no effect on the direction of Filo Mining i.e., Filo Mining and High Coast go up and down completely randomly.

Pair Corralation between Filo Mining and High Coast

Assuming the 90 days trading horizon Filo Mining is expected to generate 1.25 times less return on investment than High Coast. But when comparing it to its historical volatility, Filo Mining Corp is 2.96 times less risky than High Coast. It trades about 0.12 of its potential returns per unit of risk. High Coast Distillery is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,100  in High Coast Distillery on September 5, 2024 and sell it today you would earn a total of  300.00  from holding High Coast Distillery or generate 7.32% return on investment over 90 days.

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

Filo Mining Corp  vs.  High Coast Distillery

Filo Mining Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Filo Mining Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Filo Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

High Coast Distillery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in High Coast Distillery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, High Coast may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Filo Mining and High Coast

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

The idea behind Filo Mining Corp and High Coast Distillery 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.