Correlation Between Philex Mining and Lepanto Consolidated

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

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

Diversification Opportunities for Philex Mining and Lepanto Consolidated

0.67

Correlation Coefficient

Philex Mining  Lepanto Consolidated

Poor diversification

The 3 months correlation between Philex and Lepanto is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Philex Mining Corp and Lepanto Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepanto Consolidated and Philex 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 Philex Mining Corp are associated (or correlated) with Lepanto Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lepanto Consolidated has no effect on the direction of Philex Mining i.e., Philex Mining and Lepanto Consolidated go up and down completely randomly.

Pair Corralation between Philex Mining and Lepanto Consolidated

Assuming the 90 days trading horizon Philex Mining is expected to generate 1.47 times less return on investment than Lepanto Consolidated. But when comparing it to its historical volatility, Philex Mining Corp is 1.71 times less risky than Lepanto Consolidated. It trades about 0.01 of its potential returns per unit of risk. Lepanto Consolidated Mining is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6.60  in Lepanto Consolidated Mining on September 4, 2024 and sell it today you would lose (0.20) from holding Lepanto Consolidated Mining or give up 3.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Philex Mining Corp  vs.  Lepanto Consolidated Mining

Philex Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Philex Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Lepanto Consolidated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lepanto Consolidated Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lepanto Consolidated is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Philex Mining and Lepanto Consolidated

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

The idea behind Philex Mining Corp and Lepanto Consolidated Mining 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.