Correlation Between Lepanto Consolidated and House Of

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

Diversification Opportunities for Lepanto Consolidated and House Of

0.36

Correlation Coefficient

Lepanto Consolidated  House Of

Weak diversification

The 3 months correlation between Lepanto and House is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and House of Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on House of Investments 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 House Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of House of Investments has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and House Of go up and down completely randomly.

Pair Corralation between Lepanto Consolidated and House Of

Assuming the 90 days trading horizon Lepanto Consolidated Mining is expected to under-perform the House Of. In addition to that, Lepanto Consolidated is 1.26 times more volatile than House of Investments. It trades about -0.01 of its total potential returns per unit of risk. House of Investments is currently generating about 0.0 per unit of volatility. If you would invest  346.00  in House of Investments on October 13, 2024 and sell it today you would lose (7.00) from holding House of Investments or give up 2.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	54.05%
Values	Daily Returns

Lepanto Consolidated Mining  vs.  House of Investments

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 technical and fundamental 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.

House of Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days House of Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, House Of is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lepanto Consolidated and House Of

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

The idea behind Lepanto Consolidated Mining and House of Investments 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.