Correlation Between Lepanto Consolidated and Berjaya Philippines

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

By analyzing existing cross correlation between Lepanto Consolidated Mining and Berjaya Philippines, you can compare the effects of market volatilities on Lepanto Consolidated and Berjaya Philippines 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 Lepanto Consolidated with a short position of Berjaya Philippines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lepanto Consolidated and Berjaya Philippines.

Diversification Opportunities for Lepanto Consolidated and Berjaya Philippines

-0.2

Correlation Coefficient

Lepanto Consolidated  Berjaya Philippines

Good diversification

The 3 months correlation between Lepanto and Berjaya is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and Berjaya Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berjaya Philippines and Lepanto Consolidated 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 Lepanto Consolidated Mining are associated (or correlated) with Berjaya Philippines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berjaya Philippines has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and Berjaya Philippines go up and down completely randomly.

Pair Corralation between Lepanto Consolidated and Berjaya Philippines

Assuming the 90 days trading horizon Lepanto Consolidated is expected to generate 138.15 times less return on investment than Berjaya Philippines. But when comparing it to its historical volatility, Lepanto Consolidated Mining is 1.35 times less risky than Berjaya Philippines. It trades about 0.0 of its potential returns per unit of risk. Berjaya Philippines is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  800.00  in Berjaya Philippines on September 29, 2024 and sell it today you would earn a total of  180.00  from holding Berjaya Philippines or generate 22.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.68%
Values	Daily Returns

Lepanto Consolidated Mining  vs.  Berjaya Philippines

Lepanto Consolidated

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lepanto Consolidated Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Lepanto Consolidated is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Berjaya Philippines

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berjaya Philippines are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Berjaya Philippines unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lepanto Consolidated and Berjaya Philippines

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

The idea behind Lepanto Consolidated Mining and Berjaya 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.