Correlation Between Lepanto Consolidated and Monde Nissin

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

Diversification Opportunities for Lepanto Consolidated and Monde Nissin

0.8

Correlation Coefficient

Lepanto Consolidated  Monde Nissin

Very poor diversification

The 3 months correlation between Lepanto and Monde is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and Monde Nissin Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monde Nissin 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 Monde Nissin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monde Nissin Corp has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and Monde Nissin go up and down completely randomly.

Pair Corralation between Lepanto Consolidated and Monde Nissin

Assuming the 90 days trading horizon Lepanto Consolidated Mining is expected to under-perform the Monde Nissin. In addition to that, Lepanto Consolidated is 1.3 times more volatile than Monde Nissin Corp. It trades about -0.01 of its total potential returns per unit of risk. Monde Nissin Corp is currently generating about 0.01 per unit of volatility. If you would invest  814.00  in Monde Nissin Corp on October 9, 2024 and sell it today you would earn a total of  8.00  from holding Monde Nissin Corp or generate 0.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.5%
Values	Daily Returns

Lepanto Consolidated Mining  vs.  Monde Nissin 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.

Monde Nissin Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monde Nissin Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Lepanto Consolidated and Monde Nissin

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

The idea behind Lepanto Consolidated Mining and Monde Nissin 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.