Correlation Between National Reinsurance and Philex Mining

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

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

Diversification Opportunities for National Reinsurance and Philex Mining

0.7

Correlation Coefficient

National Reinsurance  Philex Mining

Poor diversification

The 3 months correlation between National and Philex is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding National Reinsurance and Philex Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philex Mining Corp and National Reinsurance 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 National Reinsurance are associated (or correlated) with Philex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philex Mining Corp has no effect on the direction of National Reinsurance i.e., National Reinsurance and Philex Mining go up and down completely randomly.

Pair Corralation between National Reinsurance and Philex Mining

Assuming the 90 days trading horizon National Reinsurance is expected to under-perform the Philex Mining. In addition to that, National Reinsurance is 2.1 times more volatile than Philex Mining Corp. It trades about -0.02 of its total potential returns per unit of risk. Philex Mining Corp is currently generating about 0.03 per unit of volatility. If you would invest  279.00  in Philex Mining Corp on September 13, 2024 and sell it today you would earn a total of  9.00  from holding Philex Mining Corp or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

National Reinsurance  vs.  Philex Mining Corp

National Reinsurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Reinsurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Reinsurance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Philex Mining Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Philex Mining Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Philex Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with National Reinsurance and Philex Mining

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

The idea behind National Reinsurance and Philex Mining 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.