Correlation Between Berjaya Philippines and Lepanto Consolidated

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

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

Diversification Opportunities for Berjaya Philippines and Lepanto Consolidated

-0.2

Correlation Coefficient

Berjaya Philippines  Lepanto Consolidated

Good diversification

The 3 months correlation between Berjaya and Lepanto is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Berjaya Philippines and Lepanto Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepanto Consolidated and Berjaya Philippines 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 Berjaya Philippines 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 Berjaya Philippines i.e., Berjaya Philippines and Lepanto Consolidated go up and down completely randomly.

Pair Corralation between Berjaya Philippines and Lepanto Consolidated

Assuming the 90 days trading horizon Berjaya Philippines is expected to generate 1.66 times more return on investment than Lepanto Consolidated. However, Berjaya Philippines is 1.66 times more volatile than Lepanto Consolidated Mining. It trades about 0.1 of its potential returns per unit of risk. Lepanto Consolidated Mining is currently generating about -0.02 per unit of risk. If you would invest  790.00  in Berjaya Philippines on September 29, 2024 and sell it today you would earn a total of  190.00  from holding Berjaya Philippines or generate 24.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.15%
Values	Daily Returns

Berjaya Philippines  vs.  Lepanto Consolidated Mining

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.

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.

Pair Trading with Berjaya Philippines and Lepanto Consolidated

The main advantage of trading using opposite Berjaya Philippines and Lepanto Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berjaya Philippines 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 Berjaya Philippines 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.