Correlation Between Lepanto Consolidated and Axelum Resources

Can any of the company-specific risk be diversified away by investing in both Lepanto Consolidated and Axelum Resources 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 Axelum Resources 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 Axelum Resources Corp, you can compare the effects of market volatilities on Lepanto Consolidated and Axelum Resources 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 Axelum Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lepanto Consolidated and Axelum Resources.

Diversification Opportunities for Lepanto Consolidated and Axelum Resources

0.28

Correlation Coefficient

Lepanto Consolidated  Axelum Resources

Modest diversification

The 3 months correlation between Lepanto and Axelum is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and Axelum Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axelum Resources Corp 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 Axelum Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axelum Resources Corp has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and Axelum Resources go up and down completely randomly.

Pair Corralation between Lepanto Consolidated and Axelum Resources

Assuming the 90 days trading horizon Lepanto Consolidated is expected to generate 24.97 times less return on investment than Axelum Resources. But when comparing it to its historical volatility, Lepanto Consolidated Mining is 3.24 times less risky than Axelum Resources. It trades about 0.01 of its potential returns per unit of risk. Axelum Resources Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  195.00  in Axelum Resources Corp on October 26, 2024 and sell it today you would earn a total of  20.00  from holding Axelum Resources Corp or generate 10.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Lepanto Consolidated Mining  vs.  Axelum Resources Corp

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 uncertain performance in the last few months, the Stock's basic 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.

Axelum Resources Corp

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Lepanto Consolidated and Axelum Resources

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

The idea behind Lepanto Consolidated Mining and Axelum Resources 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.