Correlation Between COL Financial and Lepanto Consolidated

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

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

Diversification Opportunities for COL Financial and Lepanto Consolidated

0.09

Correlation Coefficient

COL Financial  Lepanto Consolidated

Significant diversification

The 3 months correlation between COL and Lepanto is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding COL Financial Group and Lepanto Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepanto Consolidated and COL Financial 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 COL Financial Group 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 COL Financial i.e., COL Financial and Lepanto Consolidated go up and down completely randomly.

Pair Corralation between COL Financial and Lepanto Consolidated

Assuming the 90 days trading horizon COL Financial Group is expected to generate 0.75 times more return on investment than Lepanto Consolidated. However, COL Financial Group is 1.33 times less risky than Lepanto Consolidated. It trades about -0.09 of its potential returns per unit of risk. Lepanto Consolidated Mining is currently generating about -0.12 per unit of risk. If you would invest  194.00  in COL Financial Group on October 26, 2024 and sell it today you would lose (25.00) from holding COL Financial Group or give up 12.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.95%
Values	Daily Returns

COL Financial Group  vs.  Lepanto Consolidated Mining

COL Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COL Financial Group 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm 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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with COL Financial and Lepanto Consolidated

The main advantage of trading using opposite COL Financial and Lepanto Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COL Financial 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 COL Financial Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.