Correlation Between Lepanto Consolidated and Aboitiz Equity

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

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

Diversification Opportunities for Lepanto Consolidated and Aboitiz Equity

0.17

Correlation Coefficient

Lepanto Consolidated  Aboitiz Equity

Average diversification

The 3 months correlation between Lepanto and Aboitiz is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and Aboitiz Equity Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aboitiz Equity Ventures and Lepanto Consolidated 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 Lepanto Consolidated Mining are associated (or correlated) with Aboitiz Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aboitiz Equity Ventures has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and Aboitiz Equity go up and down completely randomly.

Pair Corralation between Lepanto Consolidated and Aboitiz Equity

Assuming the 90 days trading horizon Lepanto Consolidated Mining is expected to generate 2.77 times more return on investment than Aboitiz Equity. However, Lepanto Consolidated is 2.77 times more volatile than Aboitiz Equity Ventures. It trades about -0.03 of its potential returns per unit of risk. Aboitiz Equity Ventures is currently generating about -0.11 per unit of risk. If you would invest  6.90  in Lepanto Consolidated Mining on September 25, 2024 and sell it today you would lose (0.30) from holding Lepanto Consolidated Mining or give up 4.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Lepanto Consolidated Mining  vs.  Aboitiz Equity Ventures

Lepanto Consolidated

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lepanto Consolidated Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Lepanto Consolidated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aboitiz Equity Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aboitiz Equity Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lepanto Consolidated and Aboitiz Equity

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

The idea behind Lepanto Consolidated Mining and Aboitiz Equity Ventures 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.