Correlation Between Lepanto Consolidated and Security Bank

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

Diversification Opportunities for Lepanto Consolidated and Security Bank

0.54

Correlation Coefficient

Lepanto Consolidated  Security Bank

Very weak diversification

The 3 months correlation between Lepanto and Security is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and Security Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Bank 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 Security Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Bank Corp has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and Security Bank go up and down completely randomly.

Pair Corralation between Lepanto Consolidated and Security Bank

Assuming the 90 days trading horizon Lepanto Consolidated is expected to generate 32.09 times less return on investment than Security Bank. In addition to that, Lepanto Consolidated is 1.28 times more volatile than Security Bank Corp. It trades about 0.0 of its total potential returns per unit of risk. Security Bank Corp is currently generating about 0.18 per unit of volatility. If you would invest  6,480  in Security Bank Corp on September 4, 2024 and sell it today you would earn a total of  2,200  from holding Security Bank Corp or generate 33.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Lepanto Consolidated Mining  vs.  Security Bank 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 rather sound basic indicators, Lepanto Consolidated is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Security Bank Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Security Bank Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Security Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lepanto Consolidated and Security Bank

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

The idea behind Lepanto Consolidated Mining and Security Bank 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.