Correlation Between Filo Mining and Lynas Rare

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

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

Diversification Opportunities for Filo Mining and Lynas Rare

0.57

Correlation Coefficient

Filo Mining  Lynas Rare

Very weak diversification

The 3 months correlation between Filo and Lynas is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Filo Mining Corp and Lynas Rare Earths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lynas Rare Earths and Filo Mining 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 Filo Mining Corp are associated (or correlated) with Lynas Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lynas Rare Earths has no effect on the direction of Filo Mining i.e., Filo Mining and Lynas Rare go up and down completely randomly.

Pair Corralation between Filo Mining and Lynas Rare

Assuming the 90 days horizon Filo Mining Corp is expected to generate 0.39 times more return on investment than Lynas Rare. However, Filo Mining Corp is 2.55 times less risky than Lynas Rare. It trades about 0.03 of its potential returns per unit of risk. Lynas Rare Earths is currently generating about -0.01 per unit of risk. If you would invest  2,268  in Filo Mining Corp on September 1, 2024 and sell it today you would earn a total of  37.00  from holding Filo Mining Corp or generate 1.63% return on investment over 90 days.

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

Filo Mining Corp  vs.  Lynas Rare Earths

Filo Mining Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Filo Mining Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Filo Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lynas Rare Earths

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lynas Rare Earths has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Lynas Rare is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Filo Mining and Lynas Rare

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

The idea behind Filo Mining Corp and Lynas Rare Earths 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.