Correlation Between Crown Asia and Manila Mining

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

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

Diversification Opportunities for Crown Asia and Manila Mining

-0.21

Correlation Coefficient

Crown Asia  Manila Mining

Very good diversification

The 3 months correlation between Crown and Manila is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Crown Asia Chemicals and Manila Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manila Mining Corp and Crown Asia 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 Crown Asia Chemicals are associated (or correlated) with Manila Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manila Mining Corp has no effect on the direction of Crown Asia i.e., Crown Asia and Manila Mining go up and down completely randomly.

Pair Corralation between Crown Asia and Manila Mining

Assuming the 90 days trading horizon Crown Asia Chemicals is expected to under-perform the Manila Mining. But the stock apears to be less risky and, when comparing its historical volatility, Crown Asia Chemicals is 3.33 times less risky than Manila Mining. The stock trades about -0.03 of its potential returns per unit of risk. The Manila Mining Corp is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  0.30  in Manila Mining Corp on November 29, 2024 and sell it today you would earn a total of  0.19  from holding Manila Mining Corp or generate 63.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.88%
Values	Daily Returns

Crown Asia Chemicals  vs.  Manila Mining Corp

Crown Asia Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crown Asia Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Crown Asia is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Manila Mining Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manila Mining Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Manila Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crown Asia and Manila Mining

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

The idea behind Crown Asia Chemicals and Manila 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.

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.