Correlation Between Industrias Penoles and MAGNUM MINING

Can any of the company-specific risk be diversified away by investing in both Industrias Penoles and MAGNUM 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 Industrias Penoles and MAGNUM MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Industrias Penoles Sab and MAGNUM MINING EXP, you can compare the effects of market volatilities on Industrias Penoles and MAGNUM 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 Industrias Penoles with a short position of MAGNUM MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrias Penoles and MAGNUM MINING.

Diversification Opportunities for Industrias Penoles and MAGNUM MINING

-0.5

Correlation Coefficient

Industrias Penoles  MAGNUM MINING

Very good diversification

The 3 months correlation between Industrias and MAGNUM is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Industrias Penoles Sab and MAGNUM MINING EXP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGNUM MINING EXP and Industrias Penoles 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 Industrias Penoles Sab are associated (or correlated) with MAGNUM MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGNUM MINING EXP has no effect on the direction of Industrias Penoles i.e., Industrias Penoles and MAGNUM MINING go up and down completely randomly.

Pair Corralation between Industrias Penoles and MAGNUM MINING

Assuming the 90 days horizon Industrias Penoles Sab is expected to generate 0.8 times more return on investment than MAGNUM MINING. However, Industrias Penoles Sab is 1.24 times less risky than MAGNUM MINING. It trades about 0.01 of its potential returns per unit of risk. MAGNUM MINING EXP is currently generating about -0.13 per unit of risk. If you would invest  1,380  in Industrias Penoles Sab on December 4, 2024 and sell it today you would earn a total of  0.00  from holding Industrias Penoles Sab or generate 0.0% return on investment over 90 days.

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

Industrias Penoles Sab  vs.  MAGNUM MINING EXP

Industrias Penoles Sab

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Industrias Penoles Sab are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Industrias Penoles is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

MAGNUM MINING EXP

Risk-Adjusted Performance

Very Weak

Over the last 90 days MAGNUM MINING EXP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Industrias Penoles and MAGNUM MINING

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

The idea behind Industrias Penoles Sab and MAGNUM MINING EXP 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.