Correlation Between EEI Corp and Philex Mining

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

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

Diversification Opportunities for EEI Corp and Philex Mining

0.37

Correlation Coefficient

EEI Corp  Philex Mining

Weak diversification

The 3 months correlation between EEI and Philex is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding EEI Corp and Philex Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philex Mining Corp and EEI Corp 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 EEI Corp are associated (or correlated) with Philex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philex Mining Corp has no effect on the direction of EEI Corp i.e., EEI Corp and Philex Mining go up and down completely randomly.

Pair Corralation between EEI Corp and Philex Mining

Assuming the 90 days trading horizon EEI Corp is expected to generate 148.02 times less return on investment than Philex Mining. But when comparing it to its historical volatility, EEI Corp is 1.04 times less risky than Philex Mining. It trades about 0.0 of its potential returns per unit of risk. Philex Mining Corp is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  278.00  in Philex Mining Corp on December 28, 2024 and sell it today you would earn a total of  442.00  from holding Philex Mining Corp or generate 158.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

EEI Corp  vs.  Philex Mining Corp

EEI Corp

Risk-Adjusted Performance

Very Weak

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

Philex Mining Corp

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Philex Mining Corp are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Philex Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EEI Corp and Philex Mining

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

The idea behind EEI Corp and Philex 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.